reserve for bad debts


Also found in: Acronyms.

Allowance for Doubtful Accounts

Extra funds from sales, or another source, set aside in order to pay off bad debt if and when it arises. The allowance helps a company ward off any potential cash flow problems should its credit sales not be repaid as expected. On financial statements, it is important to note that an allowance for bad debts exists for fiscal conservatism and not because one expects a large amount of bad debt to accumulate. An allowance for doubtful accounts is also called a cushion. Banks call these funds the loan loss reserve. See also: Savings account.

reserve for bad debts

References in periodicals archive ?
Nathan Bailey, Vice President and Controller added, "Despite the reserve for bad debts recorded at September 30, the Company still reported net income for the sixteenth consecutive quarter since the move to Pampa in September of 2000.
5 million fixed asset valuation reserve, and a $90,000 reserve for bad debts expense.
25 million increase in the reserve for bad debts related to a specific major account during the third quarter, we are pleased with the overall operations of the company.
In addition, the Company increased its reserve for bad debts by $200,000 due principally to a Chapter 11 bankruptcy filing by one of the Company's large industrial customers.
The $951,000 rise in general and administrative expenses for the most recent quarter, compared to general and administrative expense for the same quarter in the prior year, was due to (1) a $500,000 non-cash charge the Company recorded to increase the reserve for bad debts, and (2) a $400,000 impairment charge related to a strategic investment the Company made during fiscal 2001 in a technology company that filed for bankruptcy in early March, 2001.
Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, 1999 1998 1999 1998 Sales 36,713 38,018 117,641 118,407 Cost of Sales: Food and beverage 10,508 11,000 33,384 33,916 Labor 13,267 13,614 41,736 41,397 Restaurant operating expenses 7,089 7,227 21,418 21,559 Restaurant depreciation 1,660 1,570 4,953 4,590 General and administrative 3,894 2,652 9,384 7,595 Restructuring charge 3,208 3,208 Reserve for bad debts 2,454 2,454 Severance charge 1,300 1,300 Interest expense, net 1,685 747 4,840 2,074 45,065 36,810 122,677 111,131 Income before income taxes (8,352) 1,208 (5,036) 7,276 Provision for income taxes (2,756) 411 (1,760) 2,299 Net income (5,596) 797 (3,276) 4,977 Basic earnings per share ($0.
3 million reserve for bad debts associated with lines of business in which the company is no longer engaged.
02 per share, after tax, in unusual items from a gain on the sale of Levitz receivable, partially offset by an increase in reserve for bad debts, write-down of investment property and other unusual charges.
The Company's existing Reserve for Bad Debts may materially increase in the current and future periods due to increasing sales based on higher fuel prices and will depend upon actual experience.
Among other things, the charge provides for accelerated global manufacturing facility consolidations, accelerated global systems' initiatives including year 2000 compliance, elimination of unprofitable non-strategic product lines and an increase in the company's reserve for bad debts to conservatively reflect the increased provider credit risk caused by recently enacted Medicare reimbursement cuts which become effective January 1, 1998.
This charge was primarily attributable to an increase in reserve for bad debts, the write-down of certain deferred offering costs, the reduction of the accrual for unbilled revenues and change in the accrual for claims against other carriers.
FCNB Corp has been notified by the Internal Revenue Service (the Service) that the Service has taken under review the company's treatment of an income tax reserve for bad debts relating to the company's 1996 acquisition of Laurel and its subsidiary thrift.