Part B: Receivables (3 marks) Highland Ltd uses the allowance method to record bad debts expense. When accounts receivable is aged at the end of December, it is estimated that 2% of Highland's accounts receivable will be uncollectable PDF Accounts receivable at 31 December are $300,000 and the Allowance for doubtful debts has a credit balance of $5,000 Required: 1. Prepare the adjusting journal entry to record bad debts expense for the year ended 31 December 2. Determine the amount of the bad debts expense if the balance in the Allowance for debt debts account is a debit of $500 instead of a credit of $5,000. Question 2: (cont) Part B: Petty cash fund (3 marks) During May, Stallone and Willis Ltd experiences the following transactions in establishing a petty cash fund. 1 May A petty cash fund is established with a cheque for $130 issued to the petty cash custodian. 31 May A count of the petty cash fund disclosed the following items: Currency (notes) $5.00 Coins 4.70 Expenditure receipts (vouchers): Office supplies $36.50 Telephone and Internet 21.30 Postage 53.70 Freight out 8.80 31 May A cheque was written to reimburse the fund and increase the fund to $200. Required: Prepare the journal entries in May that pertain to the petty cash fund. Note: Narrations not required