aging refers to the time when the debtor owes money. The longer the aging, the greater the possibility of bad debt losses. Aging analysis refers to a method to estimate the loss of bad debts according to the time of accounts receivable, also known as "aging analysis of accounts receivable". When the aging analysis method is adopted, the accounts receivable with different ages are grouped, and the estimated bad debt loss percentage of each age group is determined according to the actual data of bad debts in the previous period, and then the sum of the estimated bad debt losses of each age group is calculated by multiplying the accounts receivable amount of each age group by the corresponding estimated bad debt loss percentage, which is the estimated bad debt loss amount of the current period.

Application of aging analysis

Estimation of bad debts by using aging

Divide the length of overdue time of accounts receivable (i.e. aging) into several intervals, calculate the amount of accounts receivable in each interval, and estimate a percentage of bad debt loss for each interval; Then, the amount of accounts receivable in each interval is multiplied by the percentage of bad debt loss in each interval to estimate the bad debt loss in each interval; Finally, the sum of the estimated bad debt losses in each interval is the estimated total amount of bad debt losses.

Accounts receivable aging analysis table

Before estimating the loss of bad debts, an "Accounts receivable aging analysis table" can be compiled according to the accounts receivable's aging, so as to understand the amount distribution of accounts receivable among customers and the length of their arrears.

the information provided by the aging analysis table can help the management to know about the collection and arrears, and judge the recoverability of the arrears and possible losses. Using this table, the management authorities can also make decisions to relax or tighten commercial credit policies as appropriate, and can be used as a basis for measuring the efficiency of the departments responsible for collection and credit reporting.

Advantages and disadvantages of aging analysis

The advantage of this method is that it is easy to use and can estimate the amount of accounts receivable that cannot be realized. The disadvantage is that it does not fully conform to the matching principle, which will affect the correctness of the net income amount of each period.

Example analysis

Example: At the end of 23, the accounts receivable aging and estimated bad debt loss of Company B are as follows:

Unit: Yuan

Accounts receivable aging, estimated loss (%), estimated loss

Unexpired 2 1% 2

Overdue less than 6 months, 1 3% 3

. > 36-8

Assuming that the balance of bad debt reserve account of Company A at the beginning of 23 is 1, calculate the bad debt reserve that Company B should accrue in 23 and the balance of bad debt reserve account at the end of 23.

Solution: The balance of bad debt reserve account at the end of 23 should be 8 yuan, and there is a credit balance of bad debt reserve in 1 yuan at the beginning of 23, so the bad debt reserve should be set aside in this year at 8-1 = 7 yuan.

Debit: management fee-bad debt loss 7

Credit: bad debt reserve 7

The balance of bad debt reserve account at the end of 23 is: 1+7 = 8 yuan, that is, the bad debt loss is estimated according to the length of account receivable recording time.