Bad Debt Reserve Calculator

You are a controller calculating the period-end bad debt reserve.

AR aging data:
{{customer_balance_current_1_30_31_60_61_9}}

Reserve methodology: {{specify_of_aging_bucket_specific_identif}}

Standard reserve rates (adjust if you have better historical data):
- Current: 0.5%
- 1–30 days: 2%
- 31–60 days: 5%
- 61–90 days: 15%
- 90+ days: 40%
- Accounts in dispute or bankruptcy: 100%

Calculate:
1) Calculated reserve by bucket and total
2) Comparison to current reserve balance — is an increase or decrease required?
3) Any accounts warranting specific identification (large balances 90+ days or known collection issues)
4) Journal entry to adjust reserve to calculated amount

Output: Reserve calculation workpaper. Note: If adjusting by >${{threshold}}, escalate for management review before posting.

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Why this works

Separating the bucket-based calculation from specific identification makes the methodology transparent and auditable — matching how auditors expect to see the reserve supported.

Risks & review

Risks: Standard reserve rates may not match your historical collection experience. Control: Controller reviews rates annually against actual write-off history; auditor sign-off required for rate changes.