Purpose

To estimate and adjust the allowance for uncollectible accounts based on a 5-year historical
analysis.

Responsibility

Controller

Frequency

Monthly

Due Dates

By the 15th day after the close of each month

Processes & Procedures

Aging Method

The Apereo Foundation uses the aging method to estimate the allowance for doubtful accounts. The aging method classifies accounts receivable by the following age groups based on the due date of each invoice:

• Current
• 1 to 30
• 31 to 60
• 61 to 90
• over 90

Once per year, the Accounting Manager will update the 5-year history of uncollectible accounts by age group to generate a reserve percentage for each age group.

Each month the Accounting Manager will run an A/R Aging report and apply the reserve percentage to each open balance based on age group. The estimated uncollectible amounts for all age groups are added together to determine the total estimated uncollectible amount. The Accounting Manager will adjust the balance of the allowance for uncollectible accounts using the
following journal entry:

          Debit Allowance for Uncollectible Accounts (contra‐account to Accounts Receivable)
          Credit Accounts Receivable