Exercise 2 - Bad debts and financial statement disclosures The following transactions relate to the gardening maintenance business of Steve Jones. The balance in the Allowance for Doubtful Debts account on 1 July 2018 was a credit balance of $7440. The bad debts written-off during the year ended 30 June 2019 amounted to $5220. Accounts receivable balances on 30 June 2019 after the bad debts had been written off total $162 960, and a new allowance of 5% of debtors is required. (Ignore GST for the purposes of this exercise.)

Required (a) Prepare and balance the Allowance for Doubtful Debts accounts for the year to 30 June 2019. (b) Show how the above information would be disclosed in: i. the income statement for the year ended 30 June 2019. ii. the balance sheet as at 30 June 2019.