PROBLEM $1$:

On December $31,2015,$ for book purposes, a company has the following accounts on its closing balance sheet for the year:

Accounts receivable, gross

less: allowance for doubtful accounts

Accounts receivable, net

Deferred tax asset $($associated entirely with allowance for doubtful accounts$)$

$$200,000$

$\frac{(20,000)}{\text{\$}180,000}$

$$8,000$

For tax purposes, the company is not allowed to deduct the $$20,000$ allowance for doubtful accounts until it "writes$-$off" the accounts receivable associated with the allowance account. As of December $31,2015,$ the company had not yet written off the $$20,000$ in accounts receivable, either for book purposes rate, more in as a result, the company paid $$8,000,$ i$.$e$.$ $$20,000$ times $40\%$ ederal income tax rate, more in taxes for tax purposes than it recognized for book purposes, creating the deferred tax asset of $$8,000.$

Using T$-$accounts, at the end of the year $2015$ the accounts look as follows:

tax ace $-$ tax payals book ace tox expense

Asset Account $($reognne$)$

Deferred Tax Asset

Associated with Allowance

for Doubtful Accounts

$+,000$ Book $>$ TAX $DTL$

Required $($please be sure to show work or provide an explanation supporting your answers$)$:

A$.$ Assume that on December $31,2016,$ for both book and tax purposes, the company write$-$offs $$10,000$ of the $$20,000$ accounts receivable associated with its allowance for doubtful accounts.

Aseef

$(1)$ For book purposes, what would be the impact on the company's $2016$ balance sheet, and$/$or income statement, and$/$or cash$-$flewstatement?

Bal $10000$

$0000.$

Allowance for doubtful accounts darr$$10000$ Tax payable darr$$8000.$

There is no impact on income statement and cash flow stote

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