1. Read the Professional Judgment Allowance for Doubtful Accounts scenario.
2. Review the professional judgment framework application templateand slides.
3. Application Template & Excel spreadsheet: For December 31, 2012 in the scenario given, perform an assessment of the allowance for doubtful accounts receivable. Using the professional judgment framework, complete the application template for all process steps and provide the appropriate information in the documentation column. In performing your analysis, you should use an Excel spreadsheet to support any calculations. (Note: It may be best to use the allowance analysis provided by the credit manager as a starting point for your analysis.)
4. Memo: Using the information you documented regarding the specific and overarching considerations for each process step in the framework, prepare a memo (use the format provided in the template) that you will provide to the CFO (not to exceed three pages). Upon completing your documentation, make certain that you are able to answer the following questions:
   1. Is the documentation sufficient to support your judgment?
   2. Can another professional understand how you reached your conclusion (including why reasonable outcomes and possible alternatives identified were not selected)?

Ernst & Toung FOUND ATION Application scenarios Professional judgment framework - application scenarios - allowance for doubtful accounts 2012 Ernst & Young Foundation (US). All Rights Reserved. SCORE No. MM4121P1 Accounts receivable allowance analysis 0 to 30 days 31 to 60 days 61 to 90 days 91 to 120 days Over 120 days Total 2009 accounts receivable aging balance $ 30,000,000 $ 4,000,000 $ 2,500,000 $ 4,000,000 $ 1,500,000 $ 42,000,000 Aging percentage 71.43% 9.52% 5.95% 9.52% 3.57% Estimated uncollectible 1,200,000 $ 400,000 $ 550,000 $ 800,000 $ 1,200,000 $ 4, 150,000 Estimated uncollectible percentage 4.00% 10.00% 22.00% 20.00% 80.00% 9.88% Actual uncollectible write-off $ 4,200,000 Actual write-off percentage 10.00% 2010 accounts receivable aging balance $ 35,000,000 $ 10,000,000 $ 3,000,000 $ 1,000,000 $ 4,000,000 $ 53,000,000 Aging percentage 66.04% 18.87% 5.66% 1.89% 7.55% Estimated uncollectible 700,000 $ 800,000 $ 900,000 $ 400,000 $ 2,200,000 $ 5,000,000 Estimated uncollectible percentage 2.00% 8.00% 30.00% 40.00% 55.00% 9.43% Actual uncollectible write-off $ 5, 100,000 Actual write-off percentage 9.62% 2011 accounts receivable aging balance $ 30,000,000 $ 8,000,000 $ 4,000,000 $ 2,000,000 $ 4,000,000 $ 48,000,000 Aging percentage 62.50% 16.67% 8.33% 4.17% 8.33% Estimated uncollectible $ 300,000 $ 600,000 $ 800,000 $ 800,000 $ 1,800,000 $ 4,300,000 Estimated uncollectible percentage 1.00% 7.50% 20.00% 40.00% 45.00% 8.96% Actual uncollectible write-off 4,200,000 Actual write-off percentage 8.75% 2012 accounts receivable aging balance 15,000,000 $ 27,000,000 $ 10,000,000 $ 5,000,000 $ 10,000,000 $ 67,000,000 Aging percentage 22.39% 40.30% 14.93% 7.46% 14.93% Estimated uncollectible to 600,000 $ 2,700,000 $ 3,000,000 $ 2,000,000 $ 8,000,000 $ 16,300,000 Estimated uncollectible percentage 4.00% 10.00% 30.00% 40.00% 80.00% 24.33%