PA8-2 (Algo) Interpreting Disclosure of Allowance for Doubtful Accounts [LO 8-2] Marshall Travel, disclosed the following rounded amounts (in millions) concerning the Allowance for Doubtful Accounts on its Form 10- K annual report. Year 2018 2017 2016 Allowance for Doubtful Accounts (dollars in millions) Increases for Bad Debt Expense Beginning Balance $34 28 30 $ 22 23 12 Decreases for Write-Offs $? 17 14 Ending Balance 37 34 28 $ 37 28 Required: 1-a. Prepare a T-account for the Allowance for Doubtful Accounts and enter into it the 2016 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 2017 related to (a) estimating Bad Debt Expense and (b) writing off specific customer account balances. 3. Supply the missing information for 2018. 4. If Marshall Travel had written off an additional $23 of Accounts Receivable during 2018, by how much would Net Receivables have decreased? How much would Net Income have decreased?

PA8-2 (Algo) Interpreting Disclosure of Allowance for Doubtful Accounts [LO 8-2] Marshall Travel, disclosed the following rounded amounts (in millions) concerning the Allowance for Doubtful Accounts on its Form 10- K annual report. Year 2018 2017 2016 Allowance for Doubtful Accounts (dollars in millions) Increases for Bad Debt Expense Beginning Balance $34 28 30 $ 22 23 12 Decreases for Write-Offs $? 17 14 Ending Balance 37 34 28 $ 37 28 Required: 1-a. Prepare a T-account for the Allowance for Doubtful Accounts and enter into it the 2016 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 2017 related to (a) estimating Bad Debt Expense and (b) writing off specific customer account balances. 3. Supply the missing information for 2018. 4. If Marshall Travel had written off an additional $23 of Accounts Receivable during 2018, by how much would Net Receivables have decreased? How much would Net Income have decreased?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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