Detecting Accounting Fraud 1st Edition by Cecil Jackson

Exercise 35

Moldy Mortgage Corp. has a loan portfolio with the following loans at December 31, 2013:
Moldy Mortgage wants to have an allowance for loan losses comprised of the following:
0.1 percent of prime conforming loans
6.0 percent of subprime 80/20 loans
0.5 percent of pay-option ARM loans without negative amortization
10 percent of pay-option ARM loans with accumulated negative amortization.
Compute the required balance for the allowance for loan losses at December 31, 2013.