PA8-2 (Algo) Interpreting Disclosure of Allowance for Doubtful Accounts [LO 8-2] Walker Hills Companies, disclosed the following rounded amounts (in millions) concerning the Allowance for Doubtful Accou Form 10-K annual report. Year 2018 2017 2016 Beginning Balance Req 1A Allowance for Doubtful Accounts (dollars in millions) Increases for Bad Debt Expense $47 41 43 Beginning Balan Req 18 $35 36 25 Required: 1-a. Prepare a T-account for the Allowance for Doubtful Accounts and enter into it the 2016 amounts from the above schedule. T 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 accou balances. 3. Supply the missing information for 2018. 4. If Walker Hills Companies had written off an additional $36 of Accounts Receivable during 2018, 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. Debit Em 2 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. (Enter your answers in millions.) Req 3 Decreases for Write-offs Allowance for Doubtful Accounts 30 27 Credit Req 4 Ending Balance $ 50 47 41
PA8-2 (Algo) Interpreting Disclosure of Allowance for Doubtful Accounts [LO 8-2] Walker Hills Companies, disclosed the following rounded amounts (in millions) concerning the Allowance for Doubtful Accou Form 10-K annual report. Year 2018 2017 2016 Beginning Balance Req 1A Allowance for Doubtful Accounts (dollars in millions) Increases for Bad Debt Expense $47 41 43 Beginning Balan Req 18 $35 36 25 Required: 1-a. Prepare a T-account for the Allowance for Doubtful Accounts and enter into it the 2016 amounts from the above schedule. T 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 accou balances. 3. Supply the missing information for 2018. 4. If Walker Hills Companies had written off an additional $36 of Accounts Receivable during 2018, 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. Debit Em 2 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. (Enter your answers in millions.) Req 3 Decreases for Write-offs Allowance for Doubtful Accounts 30 27 Credit Req 4 Ending Balance $ 50 47 41
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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
Transcribed Image Text:**Interpreting Disclosure of Allowance for Doubtful Accounts**
Walker Hills Companies disclosed the following rounded amounts (in millions) concerning the Allowance for Doubtful Accounts on its Form 10-K annual report:
| Year | Beginning Balance | Increases for Bad Debt Expense | Decreases for Write-Offs | Ending Balance |
|-------|-------------------|-------------------------------|-------------------------|----------------|
| 2018 | $47 | $35 | ? | $50 |
| 2017 | 41 | 36 | 30 | 47 |
| 2016 | 43 | 25 | 27 | 41 |
### Required:
1. **Prepare a T-account for the Allowance for Doubtful Accounts and enter 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.**
2. **Write the T-account in equation format to prove the above items account for the changes in the account.**
3. **Record summary journal entries for 2017 related to (a) estimating Bad Debt Expense and (b) writing off specific customer account balances.**
4. **Supply the missing information for 2018.**
5. **If Walker Hills Companies had written off an additional $36 of Accounts Receivable during 2018, by how much would Net Receivables have decreased? How much would Net Income have decreased?**
**Table for Allowance for Doubtful Accounts:**
Provides a summary of the changes in the Allowance for Doubtful Accounts over the years 2016, 2017, and 2018, detailing beginning balances, increments through bad debt expense, write-offs, and ending balances.
### Steps:
#### 1-a. T-Account for the Allowance for Doubtful Accounts
**Allowance for Doubtful Accounts (in millions)**
| Debit | Credit |
|-----------|-----------|
| | Beginning Balance $43 (2016) |
| Write-Offs $27 (2016) | |
| | Bad Debt Expense $25 (2016)|
| | Ending Balance $41 (2016) |
#### 1-b. T-Account Equation Format
**Beginning Balance + Bad Debt Expense - Write-Offs = Ending Balance**
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