QUESTION 2 Brosnan, a sole trader, has total receivables of 42,560 on the 31" May 2020 and 1,616 as the balance on the provision for bad debts before adjustments for the year ended 31" May 2020. An analysis of debtors shows the following: Age of debt 2 - 3 months 3-6 months 6 - 12 months 12 months Amount 3,620 250 780 560 The remaining amount of the debt was aged less than 2 months. Brosnan has a policy for calculating the provision for bad debts as follows: Age of debt % Up to 2 months 2% 2 - 3 months 5% 3-6 months 10% 6 - 12 months 20% 12 months 30% Requirement: (1) Calculate the provision for doubtful debts on 31 May 2020 (5 marks) Calculate the adjustment to profit for the provision for doubtful debts (3 marks) Show the Provision for Doubtful Debts account (5 marks) (b) Brosnan purchased a machine on the 1" September 2017 for 50,000. The machine had an expected useful life of 8 years and an estimated residual value of 10,000. Brosnan calculated depreciation using the straight-line method, with a full year's depreciation charged in the year of purchase and non in the year of sale. Brosnan sold the machine on the 1" February 2020 for 28,000. Requirement: (i) Calculate the profit or loss on the disposal of the machine. (5 marks) (ii) Show the entries in the disposal account for the year ended 31" May 2020. (5 marks) (c) Explain briefly the accounting concept of "matching". Illustrate your answer with an example. Why is the matching principle important in the preparation of financial statements? (7 marks) Total Question 2: (30 marks)