FINANCIAL ACCOUNTING
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ISBN: 9781259964947
Author: Libby
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Nature of Uncollectible Accounts
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
a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM. Round your answer to one decimal place.
%
b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Johnson & Johnson. Round your answer to one decimal place.
%
c. Possible reasons for the difference in the two ratios computed in (a) and (b) include:
- Casino operators historically lose money on operations.
- Casino operators have larger accounts receivable.
- Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caught up in the excitement of gambling.
- Casino operations experience greater
bad debt risk because it is difficult to control the creditworthiness of customers entering the casino.
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- The beginning Accounts Receivable and Allowance for Doubtful Accounts balances of Justin Corporation are 500,000 and 50,000. Net credit sales totaled 4,500,000 during the year while collections amounted to 4,400,000. Bad debt expense for the year is 30,000. Included in the collections was a 10,000 account that was written off in the prior year and was recovered during the current year. What is the net realizable value of the Accounts Receivable as of the end of the year?arrow_forwardCan you also send me how to do this one? 2. Refer to the data below for XYZ Corporation. Credit sales during 2018 850,000 Accounts Receivable—January 1, 2018 334,000 Collections from credit customers during 2018 725,000 Estimated uncollectible accounts based on an aging analysis 13,200 Customer accounts written off as uncollectible during 2018 12,000 Allowance for doubtful accounts 1,700(after write-off of uncollectible accounts) Answer the following questions using the above data: A. What is the balance of Accounts Receivable at December 31, 2018? B. If the aging approach is used to estimate bad debts, what should the balance in Allowance for Doubtful Accountsbe after the bad debts adjustment? C. If the aging approach is used to estimate bad debts, what amount should be recorded as bed debts expense for2018?arrow_forwardMaple Leafs Construction has the following data for the year ended December 31, Year 1: Accounts receivable (January 1, Year 1) $455,000 Credit sales 900,000 Collections from credit customers 825,000 Customer accounts written off as uncollected 15,000 Allowance for doubtful accounts (after write-off of uncollected accounts) 2,100 Estimated uncollected accounts based on an aging 29,200 analysis (December 31, Year 1) Refer to Maple Leafs Construction. What is the balance of accounts receivable at December 31, Year 1? O $455,000 O $511,900 O $515,000 O $440,000arrow_forward
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