13 McConnell Products, Inc., located in New York City, is one of the world\'s la

Question

13 McConnell Products, Inc., located in New York City, is one of the world's largest producers of beauty and related products. The company's consolidated balance sheets for the 2015 and 2014 fiscal years included the following ($ in thousands) 10 points 2015 2014 Current assets: Receivables, less allowances of $22,696 in 2015 and $25,019 in 2014 $839,210 $759,300 eBook A disclosure note accompanying the financial statements reported the following ($ in thousands) Year Ended Print 2015 2014 (In thousands) Calculation of account receivables, net: Receivables Less: allowance for doubtful accounts Less: reserve for product returns $861,906 $784,319 References (9,028) 9,080) (13,668) (15,939 Trade accounts receivable, net: $839,210 $759,300 Assume that the company reported bad debt expense in 2015 of $2,600 and had products returned for credit totaling $3,320 (sales price). Net sales for 2015 were $6,204,800 (all numbers in thousands). Required 1. What is the amount of accounts receivable due from customers at the end of 2015 and 2014? 2. What amount of accounts receivable did McConnell write off during 2015? 3. What is the amount of McConnell's gross sales for the 2015 fiscal year? 4. Assuming that all sales are made on a credit basis, what is the amount of cash McConnell collected from customers during the 2015 fiscal year?

Explanation / Answer

1) Calculation of the Amount of Accounts Receivable due From Customers at the End of 2015 and 2014: 2015 ($ in millions) 2014 ($ in Millions) Accounts Receivable (Net) 839210 759300 Add: Allowances 22696 25019 Accounts Receivable, Gross 861906 784319 2) Calculation of the Amount of Accounts Receivable Did McConnell Write Off During 2015: ( in $) Allowance for doubtful accounts: Beginning balance 9080 Add: Bad debt expense 2600 Less: Closing Balance end of the Year -9028 Bad debts written off in 2015 2652 Therefore, the Accounts Receivable Did McConnell Write Off During 2015 is $2,652. Calculation of the Amount of McConnells's Gross Sales for the 2015 Fiscal Year: Analysis of allowance for sales returns: Balance, End of the Year 13668 Add: Actual Returns 3320 Less: Balance beginning of year -15939 Estimated sales returns 1049 Gross Sale for the year= Net Sales+Estimated Sales Return =$6204800+$1049=$6205849 Calculation of the Amount of Cash McConnell Collected from Customers during the 2015 Accounts receivable analysis ($ in thousands) Balance, beginning of year 784319 Add: Credit Sales 6205849 Less: Bad Debts Write offs -2652 Less: Actual Sales Returns -3320 Less: Balance end of year Cash collections 861906 Cash Collected From Customers 2015 7846102

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