Xerox Corporation is the company that made the photocopier popular, but since then has grown a new business related to business process outsourcing. It recently disclosed the following information concerning the Allowance for Doubtful Accounts on its Form 10-K annual report.

Required:

1. Create a T-account for the Allowance for Doubtful Accounts and enter into it the 2015 amounts from the above schedule. Then, write the T-account in equation format to prove that the above items account for the changes in the account.

2. Record summary journal entries for 2015 related to 

(i) Estimating bad debt expense and 

(ii) Writing off specific balances.

3. Supply the missing dollar amounts for a and b.

4. If Xerox had written off an additional $20 of accounts receivable during 2013, by how much would its Net Accounts Receivable have decreased? How much would the write-off have decreased Income from Operations?

Transcribed Image Text:

Allowance for Doubtful Accounts (dollars in millions) Increases for Decreases for Ending Year Beginning Balance Bad Debt Expense Write-Offs Balance 2015 $ 88 $30 $38 $ 80 2014 112 17 88 2013 108 b 33 112