MGM Resorts International owns and operates hotels and casinos including the MGM Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, MGM reported accounts receivable of $415,654,000 and allowance for doubtful accounts of $93,760,000. Johnson & Johnson manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a recent year, Johnson & Johnson reported accounts receivable of $10,114,000,000 and allowance for doubtful accounts of $340,000,000. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM Resorts International. Round to one decimal place. b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable, for Johnson & Johnson. Round to one decimal place. c. Discuss possible reasons for the difference in the two ratios computed in (a) and (b).

Splish Brothers Inc. sells office equipment and supplies to many organizations in the city and surrounding area on contract terms of 2/10, n/30. In the past, over 75% of the credit customers have taken advantage of the discount by paying within 10 days of the invoice date. The number of customers taking the full 30 days to pay has increased within the last year. Current indications are that less than 60% of the customers are now taking the discount. Bad debts as a percentage of gross credit sales have risen from the 2.5% average in past years to about 4.7% in the current year. The company's Finance Committee has requested more information on the collections of accounts receivable. The controller responded to this request with the following report. Proportion of Total 60% 22% (b1) 9% 5% 214% 13% Age Categories not yet due less than 30 days past due 30 to 60 days past due 61 to 120 days past due 121 to 180 days past due over 180 days past due Probability of Collection 98% 96% Additional…

Munoz Pointers Corporation expects to begin operations on January 1, year 1; it will operate as a specialty sales company that sells laser pointers over the Internet. Munoz expects sales in January year 1 to total $270,000 and to increase 15 percent per month in February and March. All sales are on account. Munoz expects to collect 69 percent of accounts receivable in the month of sale, 24 percent in the month following the sale, and 7 percent in the second month following the sale. Required a. Prepare a sales budget for the first quarter of year 1. b. Determine the amount of sales revenue Munoz will report on the year 1 first quarterly pro forma income statement. c. Prepare a cash receipts schedule for the first quarter of year 1. d. Determine the amount of accounts receivable as of March 31, year 1. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Determine the amount of accounts receivable as of March 31, year 1. (Do not…

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Revenue Recognition Policy Decisions.  For each of these situations, describe the revenue recognition policy that you believe that the company should follow. An international health club sells lifetime memberships costing $1,500 which allow the purchaser unlim-ited use of any of the club’s 300 facilities around the world. The initiation fee may be paid in 36 monthly installments, with a two percent interest charge on any unpaid balance. Franklin Motors, Inc., has always offered a limited, 36-month warranty on its cars and trucks, but to counter the significant competition in the industry, the company has come to the conclusion that it must do something more. With that in mind, the company developed a new warranty program: For a $1,500 payment at the time of purchase, a customer can buy a seven-year warranty that will cover replacement of almost all parts and labor. The purchased warranty expires at the end of seven years or when the customer sells the vehicle, whichever occurs first.…

You are considering investing in Dakota's Security Services. You have been able to locate the following information on the firm: Total assets are $32.6 million, accounts receivable are $4.46 million, ACP is 25 days, net income is $4.83 million, and debt-to-equity is 1.3 times. All sales are on credit. Dakota's is considering loosening its credit policy such that ACP will increase to 30 days. The change is expected to increase credit sales by 6 percent. Any change in accounts receivable will be offset with a change in debt. No other balance sheet changes are expected. Dakota's profit margin will remain unchanged. How will this change in accounts receivable policy affect Dakota's net income, total asset turnover, equity multiplier, ROA, and ROE? Note: Do not round intermediate calculations. Enter your answer in millions of dollars. Round your answers to 2 decimal places. Use 365 days a year. Net income Total asset turnover Equity multiplier ROA ROE million times times % %

The XYZ Corporation owns and operates hotels and casinos including the XYZ Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, XYZ reported account receivable of $676,000 and allowance for doubtful accounts of $132,496. Patient Care manufactures and sells a wide range of healthcare products including Band-Ald bandages and Tylenol. As of a recent year, Patient Care reported accounts receivable of $891,000 and allowance for doubtrul accounts of $30,294. Round all amounts to one decimal place. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for the XYZ Corporation. 16.6 X % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care. 3.3 x % c. Possible reasons for the difference in the two ratios computed in (a) and (b) indude: a. Casino operators historically lose money on operations. b. Casino operators have larger accounts receivable. c. Individuals who may have adequate…