2, 8-3 ??8.2 Interpreting Disclosure of Allowance for Doubtful Accounts Corp. Sonic Corp. runs the largest chain of drive-in restaurants in the United States. In its 10-K filed on November 25, 2013, Sonic reported the following changes in the Allowance for Doubtful Accounts (in thousands): Charged to Bad Debt Expense Amounts Written Off Balance at End of Period Balance at Beginning of Period $3,400 $700 $1,100 $3,000 Required: Create a T-account for the Allowance for Doubtful Accounts and enter into it the 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. TIP: The allowance increases when estimates are charged to Bad Debt Expense and when recov- 1. eries are reported. The allowance decreases when accounts are written off Record summary journal entries related to (a) estimating bad debt expense and (b) write-offs of specific balances during the year. If Sonic had written off an additional $100 (thousand) of accounts receivable during the period, by how much would Net Receivables have decreased? How much would Net Income have decreased? 2. 3