Instruction: Answer all questions.

Show all workings.

Two companies have asked you to record journal entries in twodifferent areas associated with receivables, at the end of2017.

Company I

Mandalay Company requests that you record journal entries forits bad debt expense and uncollectible accounts receivable in 2017.Mandalay’s January 1, 2017, balances relevant to accountsreceivable are as follows:

                                                                                   Dr                               Cr

Accountsreceivable                                             $400,000

Allowance for doubtful accounts                                                                $20,000

During 2017:

• $45,000 of accounts receivable were uncollectible, and no moreeffort to collect these accounts will be made.

• Total sales were $1,200,000, of which $200,000 were cashsales.

• $900,000 was collected on account.

Required:

a. i) If Mandalay used the credit sales method to estimate baddebt expense and uses 4% of credit sales as its estimate of baddebts, provide the journal entries at December 31 to recordwriteoffs and bad debts expense for 2017. [6 marks]

ii) Provide the December 31, 2017, Statement of FinancialPosition disclosure for net accounts

receivable. [12 marks]

b. i) If Mandalay decided to use the accounts receivable methodto estimate net accounts receivable, and uses 9% of accountsreceivable at year end as its estimate of uncollectibles, providethe journal entries at December 31 to record write-offs and baddebt expense for 2017.

[15 marks]

ii) Provide the December 31,2017, balance sheet disclosure fornet accounts receivable.

[3 marks]