# Estimate an allowance for doubtful accounts from my AR aging

Calculates a supportable bad-debt reserve from aging buckets and history, with specific-reserve calls and the journal entry.

- Topic: Finance & Accounting
- Framework: RTF
- Level: Standard
- Tags: Finance, Write, Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/estimate-an-allowance-for-doubtful-accounts-from-my-ar-aging

## Prompt

```text
Help me estimate the allowance for doubtful accounts (bad-debt reserve).

**AR aging report:** [PASTE - customer, balance by bucket: current, 1-30, 31-60, 61-90, 90+]
**Historical write-offs and recoveries:** [last 2-3 years by bucket or overall]
**Current allowance balance:** [AMOUNT]
**Known problem accounts:** [e.g. "Customer X filed for bankruptcy", "Customer Y disputing $12k"]
**Economic or industry changes:** [ANYTHING that makes history less reliable]
**Framework:** [US GAAP - CECL / IFRS 9 / other]

Steps:
1. Propose loss rates per aging bucket from the history I gave; if history is thin, say so and show a range.
2. Identify accounts that need a specific reserve instead of the general rate, and explain why.
3. Adjust for current conditions only where I've given a reason - don't invent economic factors.
4. Calculate the required allowance, compare it to the current balance, and show the true-up entry.
5. List accounts that look like write-off candidates now.

Return:
1. Calculation table: Bucket | Balance | Loss rate | Reserve.
2. Specific reserves with rationale.
3. Total required vs. booked, and the journal entry.
4. A short memo paragraph explaining the method, suitable for my workpapers.

Mark any assumed rate as [ASSUMPTION - CONFIRM]. Have the method reviewed by my controller or auditor.
```

## What to fill in

- last 2-3 years by bucket or overall
- AMOUNT
- ANYTHING that makes history less reliable
- US GAAP - CECL / IFRS 9 / other
- ASSUMPTION - CONFIRM

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