PA8-2 Interpreting Disclosure of Allowance for Doubtful Accounts [LO 8-2]

TravelToday, 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				Ending
	Year	Balance				Bad Debt Expense				Write-Offs				Balance
	2016	$	9,100			$	4,050			$	?			$	1,250
	2015		8,100				4,650				3,650				9,100
	2014		12,600				950				5,450				8,100

Required:

1. 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.

2. 1-b. Write the T-account in equation format to prove the above items account for the changes in the account.

3. 2. Record summary journal entries for 2015 related to (a) estimating Bad Debt Expense and (b) writing off specific customer account balances.

4. 3. Supply the missing information for 2016.

5. 4. If TravelToday had written off an additional $31 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
• Req 1B
• Req 2
• Req 3
• Req 4

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. (Enter your answers in thousands.)

Allowance for Doubtful Accounts
Beg. Bal.		12,600
		950	Bad Debt Expense
Write-Offs	5,450
End. Bal.		8,100

• Req 1A