§ 149.30. Bad debts.

 A reserve for bad debts account must be established and maintained. In order to maintain uniformity, the bad debts reserve at month’s end cannot exceed the average percentage that the actual bad debts for the preceding moving average 5-year period relates to the average actual sales for the same period. The following example sets forth the method of determining the allowable reserve for bad debts at the end of the reporting year using the preceding 5-year experience:

YEAR	ACTUAL BAD DEBTS IN EXCESS OF RECOVERIES	NET SALES
1	$1,000	$100,000
2	800	150,000
3	1,200	75,000
4	1,100	75,000
5	900	100,000
	$5,000	$500,000
Average	$1,000	$100,000

       Example:

     If current year’s sales to customers are $100,000, reserve balance at end of year cannot exceed $1,000.

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