Part A: Cash and Receivables (9 marks) Question 1: (4 marks) Briefly explain the difference between the income statement approach and the balance sheet approach to estimating bad debts. (2+2=4 marks) Answer: Question 2: (5 marks) The trial balance before adjustment of Risen Company reports the following balances: Dr. Cr. Accounts receivable $110,000 Allowance for doubtful accounts $ 2.500 Sales (all on credit) 750,000 Sales returns and allowances 45,000 Instructions (a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales. (1+1=2 marks) (b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. How will this difference affect the joumal entries in part (a)? (2+1= 3 marks)