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The Merlin Company began trading in 2017 and makes all its sales on credit. The company has suffered from a high level of bad debts

The Merlin Company began trading in 2017 and makes all its sales on credit. The company has suffered from a high level of bad debts and an allowance for doubtful debts of 3% of outstanding accounts receivable is made at the end of each year.

Information of Years2017 to 2019 is as follows:

Year

Trade Receivables(RM)

Bad Debts (RM)

2017

440,000

80,000

2018

550,000

90,000

2019

470,000

An account receivable, J.Sofiah, whose debt of RM4,000 was written off as badin 2017, settled her account in full on 30 November 2019. The company's financial year ended 31 December each year.

Required:

Show extracts from the following accounts for each of the years:

Bad debts                                                                                                  

  1. Allowances for doubtful debts                                                                  

  2. Bad debts recovered                                                                                   

  3. Income Statement (extract)

  4. Balance Sheet (extract) 

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2 Profit and Loss Account Extract for year ended 31 Dec 2017 RM Particulars 80000 13200 Particulars ... blur-text-image

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