Use four reports as below to answer the question. and here\'s the question =) Co
ID: 2380898 • Letter: U
Question
Use four reports as below to answer the question.
and here's the question =)
Consolidated Statements Of Comprehensive Income Consolidated Balance Sheets Consolidated Statements Of Cash Flows What is the amount of net accounts receivable at the end of 2012?____ (Hint: In the balance sheet. Accounts receivable is shown at its net amount.) What is the amount of total accounts receivable at the end of 2012?____ (Hint: Total accounts receivable = Net accounts receivable + Allowance for uncollectible accounts, which is sometimes just called "allowance" on financial statements. To find total accounts receivable, add back the allowance to the given amount of accounts receivable.) What is the amount of bad debt expense for 2012?____ (Hint: This is the 2012 amount of "Provision for doubtful accounts" on the Consolidated Statements of Cash Flows.) What is the amount of actual bad debt write-offs made during 2012?____ Use the following equation to solve this problem: Compare the beginning allowance with the amount of actual bad debt write-offs made during 2012. Did the company underestimate (actual bad debt write-offs > beginning allowance) or overestimate (actual bad debt write offsExplanation / Answer
1. Net Accounts Receivable for 2012= $751.9 million
2. Total Accounts Receivable for 2012 = $751.9 + $161.4 = $913.3 million
3. Bad Debts Expense for 2012 = $251.1 million
4. Begining allowance + Bad debts expense - Actual bad debts written-off = Ending allowance
$174.5 million+ $251.1 million - Actual bad debts written-off = $161.4 million
or, $425.6 million - $161.4 million = Actual bad debts written-off
or, Actual bad debts written -off = $264.2 million
5. Recivable turnover = Net sales/ Average Accounts Receivable
Net sales = $211.4 - 73.6 = $137.8 million
Average accounts receivable = ($761.5 + $751.9) /2 = $756.7 million
so, Receivable turnover = $137.8 million / $756.7 million = 0.18 times
6. Average collection period =366/Receivable turnover = 365/0.18 = 2027.7 days
7. The receivale turnover of the company(0.18 times) is very less as compare to the industry(11.41 times). so, we can say that the company perform worse than the industry as a whole.
The average collection period of company is 2028 days, where as the average collection period of industry is 32 days only. the company is 1196 days far to collect cash as compare to the industry. so, we can say that the company perform worse than the industry as a whole.
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