Case 5 : (iii)

Case No. 5 Oman wires LLC records show the following results for the year December 31, 2019. Cash sales OMR 1,025,000 Credit sales OMR 1,342,000 Balance of Accounts receivable account on December 31, 2019 OMR 575,000(Dr) Balance of Allowance for doubtful accounts on December 31, 2019 OMR 7,500(Cr) before adjustment Question No.5 You are required to: (i) Prepare necessary journal entries assuming bad debts are estimated to be; (a) 2.5% of credit sales (b) 1.5% of total sales (2 Marks) (ii) Prepare Allowance Account under receivables method assuming 6% of accounts receivable at year end is uncollectible. Also find the amount of Cash Realizable Value on December 31, 2019. (3 marks) (iii) Show how the balances of Accounts Receivable and Allowance for Doubtful Accounts appear in the Statement of Financial position as on December 31, 2019 as per part (1) (a) and (b). (2 Marks) (iv) Assume you are a credit manager of Oman wires LLC. Suggest three ways to lower down the bad debts. [Answer in 40-60 words]