Question 2 - Accounting for Receivables and Bad Debt [25 minutes; 28 points) The December 31, 2012 statement of financial position of Howson Limited reported Accounts Receivable of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000. During 2013, the following transactions occurred: Service revenue billed on account, $1,500,000 (terms, net/60) Cash Collections from customers, $1,300,000 Accounts written off as uncollectible, $37,000 Collection of accounts previously written off, $4,000. Required (show all your calculations to receive full grade): 1. Record all the 2013 transactions in journal entry form. (5 points) 2. The company uses the percentage of credit sales method to estimate bad debts expense. Assume bad debt rate is 2.5%. Show the adjusting journal entry at December 31, 2013. [3 points) 3. Prepare a partial Comparative Statement of Financial Position as at December 31, 2013 (show accounts and amounts for December 31, 2012 and December 31, 2013). [8 points] 4. Compute the Receivable turnover ratio for 2013. [4 points) 5. For this question: Assume that only $23,000 of Accounts Receivables are written-off in 2013 and the appropriate adjusting entry for bad debt expense is also made. Does the change in the amount of write off affect the trade receivable turnover ratio for 2013? Explain in detail. [8 points]