Chapter 8, Problem 8.2PB

Interpreting Disclosure of Allowance for Doubtful Accounts

Xerox Corporation is the company that made the photocopier popular, although it now describes itself as “the world’s leading enterprise for business process and document management.” It recently disclosed the following information concerning the Allowance for Doubtful Accounts on its Form 10-K annual report.

Required:

1. 1. Create a T-account for the Allowance for Doubtful Accounts and enter into it the 2012 amounts from the above schedule. Then, write the T-account in equation format to prove that the above items account for the changes in the account.
2. 2. Record summary journal entries for 2012 related to (i) estimating bad debt expense and (ii) writing off specific balances.
3. 3. Supply the missing dollar amounts for a and b.
4. 4. If Xerox had written off an additional $20 of accounts receivable during 2010, by how much would its Net Accounts Receivable have decreased? How much would the write-off have decreased Income from Operations?