< > Aa AP6-8 Determining Bad Debts and Reporting Accounts Receivable (P6-8)LO6-4 Modern Kitchens Inc. (MKI) is a Montreal-based company that sells imported fancy kitchenware to retailers. Selected account balances as at September 30, 2020, are shown below: Debit Credit Accounts receivable $119,000 Allowance for doubtful accounts $3,000 During October 2020, the following transactions occurred: a. The company sold merchandise on account to various retailers for a total amount of $76,000, terms 2/10, n/30. A few retailers who purchased merchandise for a gross amount of $40,000 paid the amount due within 10 days. A total of $16,000 of the October sales remained unpaid at October 31, 2020. b. Customers paid the company $50,000 for merchandise they purchased prior to September 30, 2020. These customers did not pay within the discount period. c Two of MKI's customers owed the company a total of $5,000 and were facing financial difficulties during October due to increased competition. They were forced to close their businesses before the end of October 2020. MKI does not expect to receive any money from these two customers and considers their accounts uncollectible. d. The company received new kitchenware from a Korean supplier, Kim & Sons Ltd., for $40,000. The invoice indicated that the supplier would allow a cash discount of 1 percent if the invoice were paid before the end of October 2020. MKI paid the supplier on November 10, 2020. MKI estimates that 4 percent of its accounts receivable at October 31, 2020, will not be collected in the future. Required: 1. Prepare the journal entries to record the transactions that occurred in October 2020, and any related adjusting journal entries at October 31, 2020, the end of MKI's fiscal year. 2. Show how the information related to accounts receivable is presented on the company's statement of financial position at October 31, 2020