McDonald’s Corporation is the world’s largest chain of hamburger fast-food restaurants. It has an Allowance for Doubtful Accounts that relates to its accounts and notes receivable. Assume that in its 2017 financial statements, McDonald’s reported the following changes in the Allowance for Doubtful Accounts (in thousands): 

Required: 

1. Create a T-account for the Allowance for Doubtful Accounts and enter into it the 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. Record summary journal entries related to (a) estimating bad debt expense, and (b) writeoffs of specific balances during the year. 

3. If McDonald’s had written off an additional $20,000 of accounts receivable during the period and the ending allowance balance was estimated to be $717, how would Net Receivables have been affected? How would Net Income have been affected? Explain why.