Problem 3: Balance Sheet vs Income Statement (4 points cach. 12 points) SF Corporation gathered the following information from its records for the year ending 12/31/19, prior to adjustment Net credit sales for the year $ 12,000,000 AR (December 31, 2019) 650,000 Allowance for Bad Debts (prior to adjustment 12/31/19) 2,000 (credit) An aging of the A/R indicates the following: 0 - 30 days 31-60 days 61 - 90 days 90+ days $ 350,000 $ 75,000 $ 80,000 $ 145,000 Management has determined that the following probabilities of accounts going bad are: 0 - 30 days 0.1% 31-60 days 1.5% 61 - 90 days 2.5% 90+ days 3% Show all work and answer the following questions. A. Prepare the adjusting entry on 12/31/19 using the Balance Sheet approach. B. Assume management has decided against using the Balance Sheet approach and instead has determine that.05% of sales will eventually not be collectible. What would the Net Accounts Receivable be at year end? Work: Answer (B) C. Given the information in this problem, which one is the more conservative approach? (A or B)? Answer (C) Analysis