PART A (10 MARKS) RISKY-LOTS Traders, an entity that trades masks on credit basis only. The following information was available during the month: Balance of accounts receivable as at 1 January 2021 was $2250,000 and balance of allowance for doubtful debts as at 1 January 2021 was $22,500. After completing all transaction for the year, the balance of accounts receivable as at 31 December 2021 was $310,000 which is represented by the following ageing report: Not yet due 1-30 days 31-60 60-90 $75,000 $125,000 days $40,000 days More than 90 days Total $45,000 $25,000 $310,000 Pham Traders established allowance for doubtful debts as following: Not yet due 1 - 30 days 31 - 60 days 60-90 days More than 90 days 1% 5% 10% 20% 30% Pham Traders applies the allowance method for bad debts and it is calculated based on the balance after adjusting all transactions. Required: a. Prepare Allowance for Doubtful Debts account as at 31 December 2021. Show all workings. (5 marks) b. Prepare the extract of profit and loss statement for the year ended 31 December 2021 and extract of statement of financial position as at 31 December 2021 to reflect transactions above. (2 marks) C. Explain the difference between bad debts expense and allowance for doubtful debts with relevant illustrations. (3 marks) PART B (10 MARKS) WINNING Enterprise is an accounting consultancy business in Kathmandu. Indicate the immediate effect of the following errors on each of the accounting elements described in the heading below using the following code: overstated understated O = U == NE = no effect (Copy the table below answering. Do not copy the questions) Net Total Total Owner's Error Profit Assets Liabilities equity Example: Received $500 cash for services rendered to a customer but recorded the transaction as $50. U U NE U i. Capital invested by the owner amounting to $10,000 has not been recorded into the books of accounts ii. Depreciation of a vehicle for the year has been recorded twice in the books of account iii. Payment of wages to employees during the year has been debited in both the wages account and bank account iv. A transfer of cash from business's bank to business' cash in hand has been omitted for the books of account V. Cash discount allowed to clients has been recorded in the accounts receivable only