PART A (10 MARKS) RISKY-LOTS Traders, an entity that trades masks on credit basis only. The...

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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 More than Total $75,000 $125,000 days $40,000 days 90 days $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. b. c. Prepare Allowance for Doubtful Debts account as at 31 December 2021. Show all workings. (5 marks) 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) Explain the difference between bad debts expense and allowance for doubtful debts with relevant illustrations. (3 marks) 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 More than Total $75,000 $125,000 days $40,000 days 90 days $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. b. c. Prepare Allowance for Doubtful Debts account as at 31 December 2021. Show all workings. (5 marks) 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) Explain the difference between bad debts expense and allowance for doubtful debts with relevant illustrations. (3 marks)