Dorvane SA applies the simplified approach to its trade receivables, without a significant financing component. Pedagogical assumption: the matrix below gives the loss rates, which are case data. Receivables not yet due: 460,000 at a rate of 1 %; 1 to 30 days past due: 310,000 at a rate of 4 %; 31 to 60 days past due: 170,000 at a rate of 10 %; more than 60 days past due: 85,000 at a rate of 30 %. Calculate the total loss allowance.
- Balance not yet due
- 460,000
- Loss rate, not yet due
- 1 %
- Balance 1 to 30 days past due
- 310,000
- Loss rate, 1 to 30 days
- 4 %
- Balance 31 to 60 days past due
- 170,000
- Loss rate, 31 to 60 days
- 10 %
- Balance more than 60 days past due
- 85,000
- Loss rate, over 60 days
- 30 %