Question

Travel Today, Inc., disclosed the following rounded amounts (in thousands) concerning the Allowance for Doubtful Accounts on its Form 10-K annual report. Allowance for Doubtful Accounts (dollars in thousands) Beginning Increases for Decreases for Balance Bad Debt Expense Write-offs 9,000 $ 4,000 ? 8,000 4,680 3,600 12,500 900 5,400 Year 2016 2015 2014 $ $ Ending Balance 1,200 9,000 8,000 Required: 1-a. Prepare a T-account for the Allowance for Doubtful Accounts and enter into it the 2014 amounts from the above schedule. The balance at the beginning of each year in the Allowance for Doubtful Accounts is a credit balance. 1-b. Write the T-account in equation format to prove the above items account for the changes in the account 2. Record summary journal entries 2015 related to (a) estimating Bad Debt Expense and (b) writing off specific customer account balances. 3. Supply the missing information for 2016. 4. If TravelToday had written off an additional $30 of Accounts Receivable during 2016, by how much would Net Receivables have decreased? How much would Net Income have decreased? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 2 Reg 3 Reg 4 < Prev 2 of 8 !!! Next >

Answer 1

1a) Allowance for Doubtful Accounts :-

Particulaes	Amount($)	Particulars	Amount($)
Beginning Balance	12500	Write off	5400
Bed Debt Expenses	900	Ending Balance	8000
	13400		13400

1b) T-Account in Equation Format :-

Behinning Balance	+	Bad Debt Expenses	-	Write offs	=	Ending Balance
$13500	+	$900	-	$5400	=	$8000

2) Journal Entries for 2015 :-

S. No.	Particulars	Debit ($)	Credit ($)
a)	Bad Debts Expenes A/c	4600
	Allowance for Doubtful A/c		4600
	(Being Record Adjusting Entry of Bad Debts)
b)	Allowance for Doubtful A/c	3600
	Accounts Receivable A/c		3600
	(Being Record Adjusting Entry of Write offs)

3) Calaculation of Write offs :-

Ending Balance = Beginning Balance + Bad Debt Expenses - Write Offs

Write Offs = Beginning Balance + Bad Debt Expense - Ending Balance

Write Offs = $9000 + $4000 - $1200

Write Offs = $11800

4) Decrease In :-

Particulars	Amount($)
Net Receivables	$0
Net Income	$0

Additional write off from Accounts receivable not effect in Net Receivable and Net Income.

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