Avon 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 2016 and 2015 fiscal years included the following ($ in thousands): 2016 2015 Current assets: Receivables, less allowances of $131,100 in2016 and $86,700 in 2015 $ 458,900 $ 440,000 A disclosure note accompanying the financial statements reported the following ($ in thousands): Year Ended 2016 2015 (In thousands) Calculation of account receivables, net: Receivables $ 590,000 $ 526,700 Less: allowance for doubtful accounts (122,900 ) (77,600 ) Less: reserve for product returns (8,200 ) (9,100 ) Trade accounts receivable, net: $ 458,900 $ 440,000 Assume that the company reported bad debt expense in 2016 of $191,000 and had products returned for credit totaling $187,000 (sales price). Net sales for 2016 were $5,578,800 ($ in thousands). Required:1. What is the amount of accounts receivable due from customers at the end of 2016 and 2015?2. What amount of accounts receivable did Avon write off during 2016?3. What is the amount of Avon’s gross sales for the 2016 fiscal year?4. Assuming that all sales are made on a credit basis, what is the amount of cash Avon collected from customers during the 2016 fiscal year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Avon 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 2016 and 2015 fiscal years included the following ($ in thousands):

	2016		2015
Current assets:
Receivables, less allowances of $131,100 in 2016 and $86,700 in 2015	$	458,900		$	440,000

A disclosure note accompanying the financial statements reported the following ($ in thousands):

	Year Ended
	2016			2015
	(In thousands)
Calculation of account receivables, net:
Receivables	$	590,000			$	526,700
Less: allowance for doubtful accounts		(122,900	)			(77,600	)
Less: reserve for product returns		(8,200	)			(9,100	)
Trade accounts receivable, net:	$	458,900			$	440,000

Assume that the company reported bad debt expense in 2016 of $191,000 and had products returned for credit totaling $187,000 (sales price). Net sales for 2016 were $5,578,800 ($ in thousands).

Required:
1. What is the amount of accounts receivable due from customers at the end of 2016 and 2015?
2. What amount of accounts receivable did Avon write off during 2016?
3. What is the amount of Avon’s gross sales for the 2016 fiscal year?
4. Assuming that all sales are made on a credit basis, what is the amount of cash Avon collected from customers during the 2016 fiscal year?

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