Assets

Receivables aging and expected credit losses

Age receivables, apply loss rates and post the allowance adjustment.

Provision matrix at 31 December 2026
Aging band	Gross receivables	Loss rate	Expected loss
Band 1 name	Band 1 gross receivables	Band 1 loss rate, percent	385.60
Band 2 name	Band 2 gross receivables	Band 2 loss rate, percent	418.75
Band 3 name	Band 3 gross receivables	Band 3 loss rate, percent	558.00
Band 4 name	Band 4 gross receivables	Band 4 loss rate, percent	618.00
Band 5 name	Band 5 gross receivables	Band 5 loss rate, percent	1,183.50
Total	81,000.00	3.91%	3,163.85

The total loss rate is the weighted average, shown for reference. Rates should reflect historical losses adjusted for current conditions and forecasts (IFRS 9 simplified approach for trade receivables).

Allowance balance before adjustment

Credit balance on 1150 in the trial balance.

Allowance adjustment
Required allowance	3,163.85
Less: existing allowance	2,400.00
Increase (credit loss expense)	763.85
Net receivables reported	77,836.15

Year-end entry

Allowance adjustment entry
Date	Account	Debit	Credit
31 Dec	6700Credit loss expense	763.85
	1150Allowance for credit losses		763.85
	Increase the allowance for expected credit losses to the required balance

Only the difference is posted: the allowance is topped up (or released) to the balance the matrix requires.

Then: write off a specific balance

Amount written off

A customer confirmed as uncollectable.

Effect of the write-off
Line	Before	After
Gross receivables (1100)	81,000.00	79,900.00
Allowance (1150)	(3,163.85)	(2,063.85)
Net receivables	77,836.15	77,836.15

Write-off entry
Account	Debit	Credit
1150Allowance for credit losses	1,100.00
1100Accounts receivable		1,100.00
Write off an uncollectable receivable against the allowance

Net receivables and profit don't change: the loss was already recognised when the allowance was made. The write-off only removes a balance that was already provided for.

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