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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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

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
$
Req 1A
Beginning Balance
$ 34
28
30
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?
Beginning
Balance
Allowance for Doubtful Accounts
(dollars in millions)
Increases for Bad
Debt Expense
$ 22
23
12
Answer is not complete.
Complete this question by entering your answers in the tabs below.
30
Req 1B
IS
Req 2
Decreases for
Write-Offs
Req 3
Write the T-account in equation format to prove the above items account for the changes in the account. (Enter your answers
in millions.)
12
Req 4
17
14
Ending Balance
$ 37
34
28
17 x
Ending Balance
S
25

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Step 1: Define Allowance for doubtful debts

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Step 2: Prepare T- Account and T- account in equation format

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Step 3: Prepare Journal Entries

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Step 4: Calculation of write offs figure in 2018

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Step 5: Analysis effect of addition write off on Accounts receivables

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