Accounting treatment of accounts receivable in five-star hotels

According to the accounting system and tax law, hotel guests should confirm their income after signing the bill, although they have to pay the bill.

Borrow; Accounts receivable

Loans; main business income

While the guests are still waiting

Borrow; Bank deposit (cash)

Loans; Accounts receivable

At the end of the period, provision for bad debts is generally made according to the difference of 0.5 ‰ of accounts receivable. If the provision for bad debts that should be accrued in this period is greater than its book balance, it should be accrued according to the difference.

Debit: Asset impairment loss

Loan: bad debt reserve

The bad debt reserve that should be accrued in this period shall be made as an opposite accounting entry to the difference between its book balance.

Debit: bad debt reserve

Loans: Asset impairment losses

For accounts receivable that are really irrecoverable, report bad debts according to the management authority and write them off as accounts receivable.

Debit: bad debt reserve

Credit: accounts receivable

But in practice, generally speaking, guests who have bills to sign will not make accounts for the time being, and then withdraw the bills and pay the income when the guests are still waiting, but this practice is not allowed by the tax, so you should be flexible in dealing with tax inspection.