rting and Analyzing Revenues, Receivables, and Operating Income $ millions) 2014
ID: 2564647 • Letter: R
Question
rting and Analyzing Revenues, Receivables, and Operating Income $ millions) 2014 2013 From the income statement: $2,989 $2,869 From the balance sheet: E6-38. E 306.8 16.0 6 287.3 13.5 Customer deposits . From the disclosure on allowance for doubtful accounts Balance at beginning of period. Additions (reductions) charged to income . 14.5 2.8 (4.3) 13.0 19.6 3.1 (8.2) 14.5 Balance at end of period Prepare the journal entry to record accounts receivable written off as uncollectible in 2014. Also prepare the entry to record the provision for doubtful accounts (bad debts expense) for 2014. What effect did these entries have on Steelcase's income for that year? a. a, b. Calculate Steelcase's gross receivables for the years given, and then determine the allowance c. Calculate Steelcase's accounts receivable turnover for 2014. (Use Accounts receivable, net for d. How much cash did Steelcase receive from customers in 2014? Analyzing and Reporting Receivable Transactions and Uncollectible Accounts (Using for doubtful accounts as a percentage of the gross receivables. the calculation.) 6. E6-39,A Percentage-of-Sales Method) its mancial records:n Company had the follouiigExplanation / Answer
a. (i). Entry to record accounts receivable written off as uncollectible during 2014
(ii) Entry to record provision for doubtful accounts
The first entry does not have any impact on the income statement, as this entry affects only the balance sheet accounts.
The second entry reduces the income by 2.8 million as the bad debts account affects the income statement.
b.
2014 2013
Accounts Receivable, net 306.8 287.3
Add: Ending allowance for doubtful accounts (A) 13.0 14.5
Accounts receivables, gross (B) 319.8 301.8
Allowance for doubtful as % of gross receivables (A / B) 4% 5% (rounded off)
(c)
Average accounts receivable =(306.8+287.3)/ 2 = 297.1
Net sales for 2014 =2989
Accounts receivable turnover = Net sales / Average accounts receivables = 2989/297.1 = 10.06
d.
Beginning balance of accouts receivables for 2014 = 287.3
Add: Net sales =2,989.0
Total accounts receivables =3,276.3
Less: Amount written of as uncollectibale = 4.3
Gross accounts receivable for 2014 3,272.0
Actual gross accounts receivable = 319.8
Collections from accounts receivable during the year =2,952.2
Account Title Debit Credit Allowance for doubtful accounts 4.3 Accounts receivable 4.3
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