Question

P6-2 LO6-2 Recording Bad Debts and Interpreting Disclosure of Allowance for Doubtful Accounts (AP6-2) 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 Allow ance 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 Balance at Beginning of Period Additions (Charges) to Expense Balance at End of Period Write Offs $ 513 $2,599 $ ? 3,705 Year 1 Year 2 Year 3 $3,882 5,627 4.778 3,882 5,627 1,202 2.051 Source: Dunkin Brands Required: Record summary journal entries related to bad debts for Year 3. 2. Supply the missing dollar amounts noted by (?) for Year 1 and Year 2.

Answer 1

Requirement 1 Credit Date Account title and explanation Year 3 Bad debt expense Allowance for doubtful accounts (To record the bad debt expense) Debit 1,202 L 1,202 Requirement 2 Year 1: End. Bal. = beg. Bal. + bad debt expense - Write off 3,882 = 2,599 + bad debt expense - 513 Bad debt expense = 3,882-2,599+513 Bad debt expense = 1,796 Thus, the additions (Charges) to expense for Year 1 is 1,796 Year 2: End. Bal. = beg. Bal. + bad debt expense - Write off 5,627 = 3,882+3,705- Write off Write off = 3,882+3,705-5,627 Write off = 1,960 Thus, write offs of Year 2 is 1,960.