Nature of uncollectible accounts The XYZ Corporation owns and operates hotels and casinos including the XYZ Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, XYZ reported accounts receiv of $610,000 and allowance for doubtful accounts of $110,410. Patient Care manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of recent year, Patient Care reported accounts receivable of $948,000 and allowance for doubtful accounts of $23,700. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for The XYZ Corporation. Round your answers to one decimal place. % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care. Round your answers 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, since it is difficult to control the creditworthiness of customers entering the casino.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question
Nature of uncollectible accounts
The XYZ Corporation owns and operates hotels and casinos including the XYZ Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, XYZ reported accounts receivable
of $610,000 and allowance for doubtful accounts of $110,410. Patient Care manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a
recent year, Patient Care reported accounts receivable of $948,000 and allowance for doubtful accounts of $23,700.
a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for The XYZ Corporation. Round your answers to one decimal place.
%
b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care. Round your answers 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, since it is difficult to control the creditworthiness of customers entering the casino.
Transcribed Image Text:Nature of uncollectible accounts The XYZ Corporation owns and operates hotels and casinos including the XYZ Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, XYZ reported accounts receivable of $610,000 and allowance for doubtful accounts of $110,410. Patient Care manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a recent year, Patient Care reported accounts receivable of $948,000 and allowance for doubtful accounts of $23,700. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for The XYZ Corporation. Round your answers to one decimal place. % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care. Round your answers 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, since it is difficult to control the creditworthiness of customers entering the casino.
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Receivables Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education