The following information relates to the trade receivables of Mag for the accounting years ended 31 December 2019 and 2020:

Gross trade receivables

2019 RM140,000

2020 RM135,000

During the year ended 31 December 2020, an examination of these debts revealed bad debts of RM18,000 and the company had decided to write off this amount. One of Mags customers whose debt of RM1,500 was written off in 2019, came to settle fully his old debts by cash.

An allowance of 2% of the net trade receivables is to be maintained.

Required:

Prepare the following for 2020:

a) Doubtful debts account (3 marks)

b) Statement of profit or loss (extract) (4 marks)

c) Statement of financial position (extract) (2 marks)

[Total: 10 marks]