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Reformulating Allowance for Doubtful Accounts MGM International operates casinos and resorts across the U.S. and in China. The company reported the following in its SEC filings. We maintain an allowance for doubtful casino accounts at all of our operating casino resorts. The provision for doubtful accounts, an operating expense, increases the allowance for doubtful accounts. We regularly evaluate the allowance for doubtful casino accounts. At domestic resorts where marker play is not significant, the allowance is generally established by applying standard reserve percentages to aged account balances. At domestic resorts where marker play is significant, we apply standard reserve percentages to aged account balances under a specified dollar amount and specifically analyze the collectability of each account with a balance over the specified dollar amount, based on the age of the account, the customer's financial condition, collection history and any other known information. MGM China specifically analyzes the collectability of casino receivables on an individual basis taking into account the age of the account, the financial condition and the collection history of the gaming promoter or casino customer. Schedule II - Valuation and Qualifying Accounts Balance at Provision Allowance for doubtful accounts (In Thousands) Year ended December 31, Year ended December 31, Year ended December 31, Year ended December 31, Beginning for Doubtful of Period Accounts 2019 2018 2017 2016 $90,775 92,571 97,920 89,789 $39,270 39, 762 20,603 10,863 Write-offs, Net of Recoveries (41 ,558) (25,952) (2,732) Balance at end of Period $94,561 90,775 92,571 97,920 MGM reported the following on its balance sheets. S thousands 2019 2018 2017 2016 Accounts receivable, net $612,717 $657,206 $540,545 $542,924 a. Analyze the allowance account for each of the four years by computing the ratio of the allowance to gross accounts receivable. Note: Round the percentage to two decimal places (for example, enter 14.56% for 14.55555%). Allowance / Accounts receivable, gross 2016 15.28% 2017 14.62% 2018 12.14% 2019 13.37% b. Reformulate the income statement and balance sheet accounts listed below for all four years to reflect the four-year average of the allowance to gross accounts receivable. Assume that the tax rate is 22% for all four years. Follow the process in Analyst Adjustments 5.2; income statement first, followed by balance sheet. Note: Do not round until your final answers; round your final answers to the nearest whole dollar. Adjustments to income statement accounts: S thousands Bad debts expense $ Income tax expense Net income S thousands 2016 x x 2017 x x 2018 x x Adjustments to balance sheet accounts: 2016 2017 2019 2018 x x x 2019 Allowance for doubtful accounts $ Accounts receivable, net Deferred tax liabilities Retained earnings