Oman Oil Marketing Company  CONSOLIDATED STATEMENT OF FINANCIAL POSITION December 31, 2021 and December 31, 2022 (in millions) Current Assets: (Amounts in OMR) 2022 2021

Cash and cash equivalents 1,000 750 Accounts receivable, less allowances of OMR 57 and OMR 59, respectively 800 850

Notes to Consolidated Financial Statements (in part)

NOTE 2: Trade Receivables The following table summarizes the activity in the allowance for doubtful accounts

2022 2021

Beginning allowance balance Charged to costs and expenses Deductions (*) Ending allowance balance

OMR 59 3 (5) 57

OMR 61 4 (6) 59

(*) Represents amounts written off against the allowance, net of recoveries.

Required

1. Why does Oman Oil Marketing Company combine cash and cash equivalents into one amount on the statement of financial position?
2. For 2022 recreate the summary journal entries that Oman Oil Marketing Company must have made for its Allowance account.
3. Based on the information presented, comment on the effect of Oman Oil Marketing Companys estimate of bad debt expense on the financial statements for the period presented.
4. Oman Oil Marketing Company plans to factor its accounts receivables to get advantage of factoring. Give your arguments to support the companys plan.

Answer rating: 100% (QA)

a Oman Oil Marketing Company combines cash and cash equivalents into one amount on the statement of financial position for the following reasons Cash and cash equivalents are both highly liquid assets ... View the full answer