Question

4. Given the following Paragraphe schedule of accounts receivable prepare the entry that you we using the allowance method to the allowance for bad debts, assuming the following estimates 005 (1/2 of Notre receives are collectible 015 ( 15 s betwee we collectie O f ects over 1 days are collectible Current 0 1 - 061 - 90 Customer A $1,000 Customers Customer $2.000 $1.000 $100 $1.500 $4.000 1.500 1.500 $2250 51.500 Assume that you currently have an allowance account balance of 525 before making your entry.

what i have is the only thing that is given to figure the problem out.. thanks!

Answer 1

Computation of provisioning to be made on debtors

Ageing of Debtors	Amount O/s	ECL rate	Expected Provision
Current receivables	$       4,000	0.50%	$                      20
0 to 30 days (*)	$       3,500	0.00%	$                       -
31 to 60 days	$       1,500	1.50%	$                      23
61 to 90 days	$       2,250	2.00%	$                      45
91+ days	$       1,500	5.00%	$                      75
			$                    163
Existing provision held			$                      25
Incremental provision to be made			$                    138
Provision for doubtful debtors (PnL expense) A/c Dr.	$          138
To Provision for doubtful debtors (BS) A/c		$    138
(Being additional provision for $138 to be made in current year)

(*) Assumed debtors under 0 to 30 days ate good and there is no requirement for provisioning on that debtors.