ACCT1501 Practice Exam Questions & Solutions 2012S12QUESTION 2 ACCOUNTS RECEIVABLES On 1st July, 2007, one of SSS’s customers, BBB, went bankrupt. BBB owes SSS $2,500 and there is no hope for recovering this amount. On 1stOctober 2007, SSS collected $85,000 from outstanding accounts. SSS Company’s financial year ends on 31stDecember. During the year to 31 December 2007, SSS sold goods for cash for $22,000, and on credit for $80,000. On 1stJanuary 2007, SSS Ltd. has a debit balance of $30,000 in Accounts Receivable and a credit balance of $ 4,500 in the Allowance for Doubtful Debts. Required:Part A (i)If bad debts expense for 2007 is recognised based on 2% of credit sales, prepare the entry to record bad debts expense.