Who Knew?: Wallace moved from Iowa to New York the day that she graduated from college with $148 in her pocket. To make ends meet, she performed in summer stock, typed scripts, did commercials and worked as a substitute English teacher in the Bronx. After performing for a year in a Greenwich Village nightclub, Wallace and four fellow entertainer friends formed an improvisational group, The Fourth Wall. In 1968 she appeared for a year Off-Broadway with the group. Afterwards, she made several other appearances in improvisational shows, and, after losing 100 pounds (45 kg) from her previous weight of 230, appeared in a nude production of Dark of the Moon at the avant-garde Mercer Arts Center.
Wallace was a semi-regular on The Merv Griffin Show, appearing over 75 times. When the show moved to Los Angeles, Wallace moved with it at Griffin's request. One of these appearances in March 1972 led to a phone call from TV producer Grant Tinker, who offered her a supporting role specifically designed for her on The Bob Newhart Show on the recommendation of CBS founder Bill Paley. The role of Carol Kester (later Carol Kester Bondurant), the acerbic receptionist to Bob Newhart's character, Dr. Robert Hartley, was written specifically for her.
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