Question

Need help with allowamce for doubtful accounts, beginning amd ensing balance, general journal, writeoff, and net receivables and net income.

TravelToday, Inc., disclosed the following rounded amounts (in thousands) concerning the Allowance for Doubtful Accounts on Its Form 10-K annual report. Year 2016 2015 2014 Allowance for Doubtful Accounts (dollars in thousands) Beginning Increases for Decreason for Balance Bad Debt Expense Write-OEEB 8,700 3,850 7,700 4,450 3,450 12,200 750 5,250 $ Ending Balance 1,050 8,700 7,700 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 for 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 $27 of Accounts Receivable during 2016, by how much would Net Receivables have decreased? How much would Net Income have decreased?

Answer 1

1-a. Allowance for doubtful accounts (2014) Beg. Bal. 12,200 Write off 5,250 750 Bad debt expense End. Bal. 7,700 1-b. Beginning balance + Bad debt expense - Write off| Ending balance 3 balance + Bad debt expense - Write off = Ending balance 12,200+ 750 - 5,250 = 7,700 — 12,200 +1 750-1 5,250 = 7,700 Transaction Credit General Journal Bad debt expense Allowance for doubtful accounts Debit 4,450 4,450 Transaction Credit General Journal Allowance for doubtful accounts Accounts receivable Debit 3,450 3,450 Allowance for doubtful accounts Additions charged Beginning balance.) Balance of end of to bad debt -Write-offs = of year year expenses 8,700 + 3,850 - 11,500 = 1,050 2016 Net receivable Net income No change No change