QUESTION 1 Total 10 marks Maxwell Ltd sells computer equipment. Sales are on a 30-day credit basis. The company does not give cash or early payment discounts. The following information was extracted from the accounting records as at 30 September 2014: $ Sales 437,000 Sales returns and allowances 22,800 Cash collected from sales 274,800 Bad debts not yet written off 3 ,476 Required: a) Assuming that Maxwell Ltd uses the direct write-off method of accounting for bad debts: 19) i) Show the general journal entry required to write off the bad debts. ii) What amount would be shown for bad debts expense in the income statement at 30 September 2014? iii) What amount would be shown for accounts receivable in the balance sheet at 30 September 2014? (5 marks) Assuming that the company uses the allowance method instead and the following additional information became available: Allowance for doubtful debts (1 October 2013) $3 ,960 Cr Allowance is calculated at 1% of net credit sales for the year. There is no opening balance for Accounts receivable. 1) Show the general journal entries required to write off the bad debts and recognise the required allowance for doubtful debts. ii) What amount would be shown for bad debts expense in the income statement at 30 September 2014? iii) What amount would be shown for accounts receivable in the balance sheet at 30 September 2014