Bad Debt Expense Calculator
Estimate uncollectible accounts using three industry-standard methods. Calculate your allowance for doubtful accounts and net realizable value.
Bad Debt Analysis
Estimate your bad debt expense and allowance for doubtful accounts
Choose from three methods to estimate uncollectible accounts: percentage of sales, percentage of receivables, or an aging analysis with industry-standard loss rates.
Bad Debt Estimation
Estimates bad debt as a percentage of total credit sales
Total credit sales for the period
Historical bad debt rate (typically 1-5%)
For calculating Net Realizable Value
* Based on the percentage sales method
Select a method and enter details to estimate bad debt
Understanding Bad Debt
How bad debt estimation works
Choose a Method
Select the estimation approach that best fits your business: percentage of sales for income statement focus, or percentage of receivables / aging for balance sheet accuracy.
Estimate the Allowance
Apply historical rates or aging analysis to determine the appropriate allowance for doubtful accounts contra-asset balance.
Record the Expense
Book the bad debt expense on the income statement and adjust the allowance account to reflect estimated uncollectible amounts.
Review and Adjust
Regularly compare actual write-offs to estimates. Adjust rates each period to improve accuracy and maintain GAAP compliance.