Question

Required information [The following information applies to the questions displayed below.] Dunkin Brands is a specialty coffee roaster and marketer of branded fresh-roasted whole bean coffee and a wide variety of donuts and pastries. It recently disclosed the following information concerning the Allowance for Doubtful Accounts on its Form 10-K Annual Report submitted to the Securities and Exchange Commission. A summary of the Allowance for Doubtful Accounts is as follows (dollars in thousands): Allowance for Doubtful Accounts Year 1 Year 2 Year 3 Balance at Beginning of Period $ 2,599 3,882 5,627 Additions (Charges) to Expense Write-offs $ 513 3,705 ? 1,202 2,051 Balance at End of Period $ 3,882 5,627 4,778 2-a. Compute the missing dollar amounts for year 1. 2-b. Compute the missing dollar amounts for year 2.

Answer 1

Answers

• Equation to be used:
  Beginning balance of Allowance account + Additional charges to Expense – Write offs = Ending Allowance account balance
• Requirement 2[a]
  Beginning balance of Allowance account + Additional charges to Expense – Write offs = Ending Allowance account balance

$ 2599 + Additional charges to Expense - $ 513 = $ 3882
Additional charges to Expense = 3882 + 513 – 2599
Additional charges to Expense = $ 1796 Answer

• Requirement 2[b]
  Beginning balance of Allowance account + Additional charges to Expense – Write offs = Ending Allowance account balance
  $ 3882 + $ 3705 – Write offs = $ 5627
  3882 + 3705 – 5627 = Write offs
  Write offs = $ 1960 Answer