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please reply me in 1 hour asap, thanks ! QUESTION 4: There are 11 marks allocated to this question. As Ena and Al have expanded
please reply me in 1 hour asap, thanks ! QUESTION 4: There are 11 marks allocated to this question. As Ena and Al have expanded their business, they have noticed how hard it can be to keep track of which customers owe them money and when they should be paying. As a result of their haphazard approach to managing their receivables they have noticed that Shortcuts to Food has experienced an increase in the number of bad debts they have recorded. In the past Ena would simply write off any bad debts as an expense once she got official notification the customer could not pay. Al has suggested this is a very muddled way of doing things and would prefer to be a bit proactive. Surprisingly Al has done some research and based on the past couple of years has worked out that about 8% of the credit sales they make end up becoming bad debts. Based on the current year's income statement net sales totalled $38,160 and Al has determined $5,820 of those were cash sales. REQUIRED: 1. Identify the method Eng has been using to account for Bad Debts and outline why it is not the preferred method. [3 marks) 2. Calculated the Doubtful Debts expense using the information provided by Al. [4 marks) 3. Era has heard there is another much more complex method of calculating doubtful debts but focuses on the age of debtors and is seen to be more accurate. Identify the method Ena has heard about and explain the process to calculate the doubtful debts expense under this method. [4 marks)
please reply me in 1 hour asap, thanks !
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