Gemstone Products 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): Current assets: 2016 2015 Receivables, less allowances of $131,565 in 2016 and $87,165 in 2015 $ 459,500 $ 440,300 A disclosure note accompanying the financial statements reported the following ($ in thousands) Calculation of account receivables, net: Receivables Less: allowance for doubtful accounts Less: reserve for product returns Trade accounts receivable, net: Year Ended 2016 (In thousands) $ 591,065 (122,945) (8,620) $ 459,500 2015 (In thousands) $527,465 (77,645) (9,520) $ 440,300 Assume that the company reported bad debt expense in 2016 of $191,300 and had products returned for credit totaling $187,045 (sales price). Net sales for 2016 were $5,593,800 ($ 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 Gemstone write off during 2016? 3. What is the amount of Gemstone'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 Gemstone collected from customers during the 2016 fiscal year?
Gemstone Products 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): Current assets: 2016 2015 Receivables, less allowances of $131,565 in 2016 and $87,165 in 2015 $ 459,500 $ 440,300 A disclosure note accompanying the financial statements reported the following ($ in thousands) Calculation of account receivables, net: Receivables Less: allowance for doubtful accounts Less: reserve for product returns Trade accounts receivable, net: Year Ended 2016 (In thousands) $ 591,065 (122,945) (8,620) $ 459,500 2015 (In thousands) $527,465 (77,645) (9,520) $ 440,300 Assume that the company reported bad debt expense in 2016 of $191,300 and had products returned for credit totaling $187,045 (sales price). Net sales for 2016 were $5,593,800 ($ 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 Gemstone write off during 2016? 3. What is the amount of Gemstone'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 Gemstone collected from customers during the 2016 fiscal year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Gemstone Products 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 $131,565 in 2016 and
$87,165 in 2015
$ 459,500 $ 440,300
A disclosure note accompanying the financial statements reported the following ($ in thousands)
Calculation of account receivables, net:
Receivables
Less: allowance for doubtful accounts
Less: reserve for product returns
Trade accounts receivable, net:
Year Ended
2016 (In
thousands)
$ 591,065
(122,945)
(8,620)
$ 459,500
2015 (In
thousands)
$ 527,465
(77,645)
(9,520)
$ 440,300
Assume that the company reported bad debt expense in 2016 of $191,300 and had products returned for credit totaling $187,045
(sales price). Net sales for 2016 were $5,593,800 ($ 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 Gemstone write off during 2016?
3. What is the amount of Gemstone'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 Gemstone collected from customers during the
2016 fiscal year?
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Step 1: Introduction of accounts receivable
VIEWStep 2: Requirement 1 - Computation of the amount of accounts receivable at the end of 2016 and 2015
VIEWStep 3: Requirement 2 - Computation of the amount of accounts receivable for write off during 2016
VIEWStep 4: Requirement 3 - Computation of the amount of gross sales for 2016
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