Merck & Company reported the following in its financial statements. $ millions Accounts receivable, net Allowance for doubtful accounts 2016 2017 2018 2019 $8,773 $8,591 $8,839 $8,473 244 199 149 108 Adjust the balance sheet and income statement to reflect a 1.97874% of Allowance for doubtful accounts to Gross accounts receivables for each year. Assume a tax rate of 20%. Round answers to one decimal. • Use a negative sign to indicate if the adjustment decreases an account balance. 2016 2017 2018 2019 Adjusted allowance for doubtful accts. $ 178.4 $ 173.9 $ 177.8 $ 169.8 Income Statement Adjustments Bad debts expense (65.6) (25.1) 28.8 61.8 Income tax expense at 20% (13.1) (5) 5.8 12.4 Net Income 52.5 20.1 (23.1) (49.4) Balance Sheet Adjustments Allowance for doubtful accounts (65.6) (90.6) (61.8) 0 Accounts receivable, net 65.6 90.6 61.8 0 Deferred tax liabilities 13.1 18.1 12.4 0 Retained Earnings 52.5 72.5 49.4 0
Merck & Company reported the following in its financial statements. $ millions Accounts receivable, net Allowance for doubtful accounts 2016 2017 2018 2019 $8,773 $8,591 $8,839 $8,473 244 199 149 108 Adjust the balance sheet and income statement to reflect a 1.97874% of Allowance for doubtful accounts to Gross accounts receivables for each year. Assume a tax rate of 20%. Round answers to one decimal. • Use a negative sign to indicate if the adjustment decreases an account balance. 2016 2017 2018 2019 Adjusted allowance for doubtful accts. $ 178.4 $ 173.9 $ 177.8 $ 169.8 Income Statement Adjustments Bad debts expense (65.6) (25.1) 28.8 61.8 Income tax expense at 20% (13.1) (5) 5.8 12.4 Net Income 52.5 20.1 (23.1) (49.4) Balance Sheet Adjustments Allowance for doubtful accounts (65.6) (90.6) (61.8) 0 Accounts receivable, net 65.6 90.6 61.8 0 Deferred tax liabilities 13.1 18.1 12.4 0 Retained Earnings 52.5 72.5 49.4 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
am.104.
Transcribed Image Text:Merck & Company reported the following in its financial statements.
$ millions
Accounts receivable, net
Allowance for doubtful accounts
2016 2017 2018 2019
$8,773 $8,591 $8,839 $8,473
244
199 149 108
Adjust the balance sheet and income statement to reflect a 1.97874% of Allowance for doubtful accounts to Gross accounts receivables for each year. Assume a tax rate of 20%.
• Round answers to one decimal.
• Use a negative sign to indicate if the adjustment decreases an account balance.
2016
2017
2018
2019
Adjusted allowance for doubtful accts. $
178.4 $
173.9 $
177.8 $
169.8
Income Statement Adjustments
Bad debts expense
Income tax expense at 20%
Net Income
(65.6)
(25.1)
28.8
61.8
(13.1)
(5)
5.8
12.4
52.5
20.1
(23.1)
(49.4)
Balance Sheet Adjustments
Allowance for doubtful accounts
(65.6)
(90.6)
(61.8)
0
Accounts receivable, net
65.6
90.6
61.8
0
Deferred tax liabilities
13.1
18.1
12.4
0
Retained Earnings
52.5
72.5
49.4
0
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