Question is below

PART B: SUBSTANTIVE PROCEDURES FOR BAD DEBT ALLOWANCE (10 MARKS) (Suggested Time: 18 Minutes) It is common practice for companies to make two allowances for bad debts: 1. The specific allowance is based on accounts the company has reason to suspect may not be paid. 2. The general allowance relates to accounts as yet unknown but that experience suggests may not be paid. The likelihood of a debt being unpaid is usually assumed to increase the longer it remains unpaid, and many companies determine a general allowance as a percentage of overdue receivables, with an increasing percentage being applied against the longest overdue accounts. (Leung et al. 2011, p.618) Required: Describe the procedures you would adopt in verifying; 1. a general allowance for bad debts (5 marks) 2. a specific allowance for bad debts