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Calculate provision expenses and write its journal entry
A finance institution has loan portfolio and the respective details are as given below −
|Loan portfolio (%)||31-12-15||Rate to calculate (%)|
|Loan in arrears|
|For first 30 days||285147||2|
|Next 30 days||175823||22|
|Next 30 days||75259||22|
|Next 90 days||65231||53|
|Next 180 days||46327||100|
|360 days up||25423||100|
Calculations of provisions are as follows −
|Loan portfolio||31-12-15||Rate to calculate (%)|
|For first 30 days||285147||2||5702.94|
|Next 30 days||175823||22||38681.06|
|Next 30 days||75259||22||16556.98|
|Next 90 days||65231||53||34572.43|
|Next 180 days||46327||100||46327|
|360 days up||25423||100||25423|
The journal entry for the provision expenses as per the above calculations is as follows −
Loan loss reserves
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