Radiant Company sells a variety of imported goods. By selling on credit, Radiant cannot expect to collect 100% of its accounts receivable. At December 31, 2019, Radiant reported the following in its statement of financial position:
Accounts receivable P2,197,500
Less allowance for bad debts ( 133,500)
Accounts receivable, net P2,064,000
During the year ended December 31, 2020, Radiant earned sales revenue of P537,702,500 and collected cash of P528,070,500 from customers. Assume bad debts expense for the year was 1% of sales revenue and that Radiant wrote off uncollectible accounts receivable totaling P5,439,500.
Required:Compute for the following
a.Accounts receivable balance at December 31, 2020
b.December 31, 2020 balance of the Allowance for Bad Debts account