MGM Resorts International (MGM) owns and operates hotels and casinos including the MGM Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, MGMreported accounts receivable of $707,278,000 and allowance for doubtful accounts of $94,561,000. Johnson & Johnson (JNJ) manufactures and sells a wide range ofhealthcare products including Band-Aids and Tylenol. As of recent year, J&J reported accounts receivable of $14,707,000,000 and allowance for doubtful accounts of$226,000,000.a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM. Round your answer to one decimal place.%b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for J&J. Round your answer to one decimal place.%c. Possible reasons for the difference in the two ratios computed in (a) and (b) include:a. Casino operators historically lose money on operations.b. Casino operators have larger accounts receivable.c. Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caught up in the excitement ofgambling.d. Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casino.c and d✓

Requirement:-a Calculation of the percentage of the allowance for doubtful accounts to the accounts receivable for MGM as follows under:- Percentage of the allowance for doubtful accounts =$94,561,000/$707,278,000x100 =13.37%Requirement:-b Percentage of the allowance for doubtful accounts =$226,000,000/$14,707,000,000x100 =1.54%Requirement:-c Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caught up in the excitement of gambling. Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casino. Option c and d is correct

Business

Accounting

MGM Resorts International (MGM) owns and operates hotels and casinos including the MGM Grand and the Bellagio in Las Vegas, Neva reported accounts receivable of $707,278,000 and allowance for doubtful accounts of $94,561,000. Johnson & Johnson (JNJ) manufact healthcare products including Band-Aids and Tylenol. As of a recent year, J&J reported accounts receivable of $14,707,000,000 and allowa $226,000,000. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM. Round your answer to one deci % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for J&J. Round your answer to one decin % c. Possible reasons for the difference in the two ratios computed in (a) and (b) include: a. Casino operators historically lose money on operations. b. Casino operators have larger accounts receivable. c. Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caugh gambling. d. Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casin

MGM Resorts International (MGM) owns and operates hotels and casinos including the MGM Grand and the Bellagio in Las Vegas, Neva reported accounts receivable of $707,278,000 and allowance for doubtful accounts of $94,561,000. Johnson & Johnson (JNJ) manufact healthcare products including Band-Aids and Tylenol. As of a recent year, J&J reported accounts receivable of $14,707,000,000 and allowa $226,000,000. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM. Round your answer to one deci % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for J&J. Round your answer to one decin % c. Possible reasons for the difference in the two ratios computed in (a) and (b) include: a. Casino operators historically lose money on operations. b. Casino operators have larger accounts receivable. c. Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caugh gambling. d. Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casin

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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Question

MGM Resorts International (MGM) owns and operates hotels and casinos including the MGM Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, MGM
reported accounts receivable of $707,278,000 and allowance for doubtful accounts of $94,561,000. Johnson & Johnson (JNJ) manufactures and sells a wide range of
healthcare products including Band-Aids and Tylenol. As of recent year, J&J reported accounts receivable of $14,707,000,000 and allowance for doubtful accounts of
$226,000,000.
a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM. Round your answer to one decimal place.
%
b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for J&J. Round your answer to one decimal place.
%
c. Possible reasons for the difference in the two ratios computed in (a) and (b) include:
a. Casino operators historically lose money on operations.
b. Casino operators have larger accounts receivable.
c. Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caught up in the excitement of
gambling.
d. Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casino.
c and d
✓

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