Question

Wheelys, Inc. designs and sells footwear with a wheel in the heel, worn by sometimes-annoying kids at shopping malls. It recently disclosed the following information concerning the Allowance for Doubtful Accounts in its annual report. SCHEDULE I Valuation and Qualifying Accounts (dollars in thousands) Additions Allowance for Balance at Charged to Bad Debt Expense Write- Doubtful Beginning of Balance at End of Year Accounts Offs Year $ 0 $ 69 $189 $120 2017 2016 410 333 554 189 2015 130 435 410 ? Required: 1-a. Complete the T-account for the Allowance for Doubtful Accounts by entering into it the 2017 amounts from the above schedule. (Enter your answers in thousands.) Allowance for Doubtful Accounts Beg. bal End. bal

Answer 1

Solution 1a:

K TravelToday Solutiin 1a: Beg. Bal. Allowance for Doubtful Accounts (2017) 189 O Bad debt expense 69 Write offs End. Bal. 14 15 16 17 18 19 -183 (8) ) Sheet779 ) Sheet780 Sheet106 (17) Sheet369 (2) Sheet 783 Sheet784 Sheet49 (20)

Solution 1b, 3 and 4:

M N O P Q R S W X Y Solution 1b: Beginning balance + Bad debt expense - Write offs = Ending balance 189+ 69= 120 Debit Credit Solution 3: Journal entries for 2016 Transaction General Journal a Bad debts expense Dr To Allowance for Doubtful Accounts (To record adjusting entry for bad debts) 333 333 554 Allowance for Doubtful Accounts To Accounts Receivable (To record adjusting entry for write offs) 554 Solution 4: Allowance for Doubtful Accounts Balance at Additions charged | Balance at End beginning of the + to Bad debt - Write offs=1 of the year year expense 130+ 435-1 155 =| 410 2015 15 22 23 24 26 27 28 -183 (8) Sheet779 ) Sheet780 Sheet106 (17) Sheet369 (2) Sheet783 ) Sheet784 Sheet49 (20)

Solution 5a:

No, net receivable will not be affected.

Because write off will be reduced from both gross receivables and allowance for doubtful accounts.

Solution 5b:

No, net income will not be affected.

Because write off is charged to allowance for doubtful accounts not the income statement.