Hi there,

I was wondering if someone can please explain the solution to this problem in detail neatly please.

* nect A7-4 Accounts Receivable-Allowances: At 31 December 20X8, Security Contra Limited reported gross accounts receivable of $1,240,900. Investigation showed the followi a. Customers are permitted to return 2% of annual sales for full credit, as long as goods am returned in good condition within 30 days of delivery. Based on past years' experience $25,100 of goods might be returned. As returns are received during the year, the sales returns account, a contra account to sales, is increased. An allowance for sales returns exists, at $19,600, unchanged from the previous year-end. b. The credit balance in the allowance for doubtful accounts was $91,200 after write-offs for the year but before any bad debt adjustment. Bad debt expense is based on a percentage of receivables. Based on the latest available facts, $140,000 will not be collected due to collection issues. c. Terms of 1/10, n/30 were granted to all customers. Accounts receivable were recorded gross, and the discounts taken were recorded when taken by the customers in a discounts account, reported contra to the sales account. Estimated discounts inherent in the closing accounts receivable balance were $15,300. The allowance for sales discounts account was established at $14,900 last year and has not been adjusted since. Required: 1. Prepare year-end adjusting entries with respect to accounts receivable. 2. Show how the net accounts receivable would appear on the statement of financial posi- tion on 31 December 20X8