Question 3. Hanoi Company provides for Doubtful Account based on 2.5% of gross Account Receivable. The following data is available for 2020

Credit sales during 2020 $4,500,000

Account Receivable 1,200,000

Allowance for Doubtful Accounts (1/1/2020) 37,000

Collections of accounts written off in a prior year

(Customers credit was re-established) 9,000

Customer accounts are written off as uncollectible

during 2020 33,200

1. Make the adjusting entry to record the Allowance for Doubtful Account on December 31, 2020. (5 marks)
2. Repeat part a, assuming that Allowance for Doubtful Account has the balance of 4,500 debits as of 1/1/2020. (5 marks)
3. According to part a, what is the balance for Cash Realizable Value as of December 31, 2020? (5 marks)
4. Discuss the reasons why the allowance method is preferable to direct write-off method. (5 marks)