Lim runs a trading business. He has provided the following information. 1 All sales are made on credit. 2 The business's terms of trade with customers are for payment in full within 30 days. 3 No discount is offered for early settlement. 4 The business's trade receivables collection period is 34 days on average. Jennifer is a prospective new customer. The following information has been made available about Jennifer's business. 1 Jennifer operates her business overseas. 2 Jennifer opened her business selling electronic items nine months ago. As a successful business, she expects to double her sales revenue within one year. 3 Jennifer's business pays its suppliers on average within 35 days. 4 Jennifer can provide details of two of her current suppliers who are willing to give a reference as to her reliability and payment history. REQUIRED (a) Recommend whether or not Lim should agree to make sales on credit to Jennifer. Justify your [7] decision with three reasons. Additional information The following transactions took place during May 2020 with a credit customer, Tan. 2020 May 15 8 Goods, $800, were supplied to Tan Tan returned faulty goods, cost $200 18 Tan paid Lim $250 Tan paid Lim the outstanding balance on his account by cheque The bank returned Tan's cheque due to insufficient funds 25 29 The balance on Tan's account was still outstanding at the end of Lim's business financial year on 30 September 2020. Lim decided to write this balance off in full. REQUIRED (b) Prepare the journal entry to write off the outstanding balance at 30 September 2020. A narration is required. [4] (c) Explain why a business may decide to make an allowance for impairment of trade receivables. [2] (d) Name one accounting theory which is applied when making an allowance for impairment of trade receivables. [1]