INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
9th Edition
ISBN: 9781260216141
Author: SPICELAND
Publisher: MCG CUSTOM
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Chapter 7, Problem 7.3P
• LO7–5
Real World Financials
Nike, Inc., is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2015 financial statements contain the following information ($ in millions):
| 2015 | 2014 | |
| $ 3,358 | $ 3,434 | |
| Income statements: | ||
| Sales revenue | $30,601 | $27,799 |
A note disclosed that the allowance for uncollectible accounts had a balance of $78 million and $78 million at the end of 2015 and 2014, respectively. Bad debt expense for 2015 was $20 million. Assume that all sales are made on a credit basis.
Required:
1. What is the amount of gross (total) accounts receivable due from customers at the end of 2015 and 2014?
2. What is the amount of bad debt write-offs during 2015?
3. Analyze changes in the gross accounts receivable account to calculate the amount of cash received from customers during 2015.
4. Analyze changes in net accounts receivable to calculate the amount of cash received from customers during 2015.
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Students have asked these similar questions
PROBLEM 5
NINE, INC. estimates its bad debt losses by aging its accounts receivable. The aging
schedule
of
accounts receivable at
Age of Accounts
0- 30 days
31 - 60 days
61 - 90 days
91 - 120 days
Over 120 days
December 31.
below.
Amount
2016.
is
presented
P 843,200
461.000
192.400
76,650
39.400
Nine Inc.'s uncollectible accounts experience for the past 5 years are summarized in the
0 - 30
Days
0.3%
following schedule:
61 - 90
Days
12%
91 - 120
Days
38%
A/R Balance
Dec. 31
P 1,312,500
999,999
465,000
816.000
1,243,667
31 - 60
Over 120
Year
2015
Days
1.8%
Days
65%
1.6%
1.5%
2014
0.5%
11%
41%
70%
2013
69%
0.2%
0.4%
0.9%
9%
50%
47%
33%
2012
1.7%
10.2%
81%
2011
2.0%
9.7%
95%
The balance of the allowance for bad debts account at December 31, 2016. (before
adjustment) is P84,500.
Requirements:
1. What is the average bad debt expense rate for "91-120 days" accounts?
A. 76%
В. 8.6%
C. 10.38%
D. 41.80%
hh
E10-1 Determining Financial Statement Effects of Transactions Involving Notes Payable [LO10-2]
Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Hudson's
Bay Company (HBC) is Canada's largest department store. Each Christmas, HBC builds up its inventory to meet the needs of Christmas
shoppers. A large portion of Christmas sales are on credit. As a result, HBC often collects cash from the sales several months after
Christmas. Assume that on November 1, 2020, HBC borrowed $6 million cash from Downtown Bank and signed a promissory note that
matures in six months. The interest rate was 7.5 percent payable at maturity. The accounting period ends December 31.
Required:
1. Indicate the accounts, amounts, and effects (+ for increase, - for decrease, and NE for no effect) of the (a) issuance of the note on
November 1, (b) impact of the adjusting entry on December 31, 2020, and (c) the payment of the note and interest on…
Chapter 7 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Distinguish between the gross and net methods of...Ch. 7 - Briefly explain the accounting treatment for sales...Ch. 7 - Explain the typical way companies account for...Ch. 7 - Briefly explain the difference between the income...
Ch. 7 - Prob. 7.11QCh. 7 - Is any special accounting treatment required for...Ch. 7 - Explain any possible differences between...Ch. 7 - Prob. 7.14QCh. 7 - What is meant by the discounting of a note...Ch. 7 - What are the key variables that influence a...Ch. 7 - Explain how the CECL model (introduced in ASU No....Ch. 7 - Prob. 7.18QCh. 7 - Prob. 7.19QCh. 7 - (Based on Appendix 7B) Marshall Companies, Inc.,...Ch. 7 - Prob. 7.21QCh. 7 - Prob. 7.1BECh. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Cash discounts; gross method LO73 On December 28,...Ch. 7 - Prob. 7.5BECh. 7 - Sales re turns LO74 During 2018, its first year...Ch. 7 - Sales re turns LO74 Refer to the situation...Ch. 7 - Prob. 7.8BECh. 7 - Prob. 7.9BECh. 7 - Uncollectible accounts; balance sheet approach ...Ch. 7 - Uncollectible accounts; solving for unknown LO75,...Ch. 7 - Prob. 7.12BECh. 7 - Note receivable LO77 On December 1, 2018,...Ch. 7 - Long-term notes receivable LO74 On April 19,...Ch. 7 - Prob. 7.15BECh. 7 - Factoring of accounts receivable LO78 Refer to...Ch. 7 - Prob. 7.17BECh. 7 - Discounting a note LO78 On March 31, Dower...Ch. 7 - Receivables turnover LO78 Camden Hardwares credit...Ch. 7 - Prob. 7.20BECh. 7 - Prob. 7.21BECh. 7 - Impairments of Accounts Receivable Appendix 7B...Ch. 7 - Credit Losses on Accounts Receivable (CECL Model) ...Ch. 7 - Prob. 7.1ECh. 7 - Prob. 7.2ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Trade and cash discounts; the gross method and the...Ch. 7 - Prob. 7.6ECh. 7 - Cash discounts; the net method LO73 [This is a...Ch. 7 - Sales returns LO74 Halifax Manufacturing allows...Ch. 7 - Prob. 7.9ECh. 7 - Prob. 7.10ECh. 7 - Uncollectible accounts; allowance method; balance...Ch. 7 - Uncollectible accounts; allowance method and...Ch. 7 - Uncollectible accounts; allowance method; solving...Ch. 7 - Note receivable LO77 On June 30, 2018, the...Ch. 7 - Noninterest-bearing note receivable LO77 [This is...Ch. 7 - Long-term notes receivable LO77 On January 1,...Ch. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Factoring of accounts receivable with recourse ...Ch. 7 - Factoring of accounts receivable with recourse...Ch. 7 - Discounting a note receivable LO78 Selkirk...Ch. 7 - Concepts; terminology LO71 through LO78 Listed...Ch. 7 - Receivables; transaction analysis LO73, LO75...Ch. 7 - Prob. 7.25ECh. 7 - Prob. 7.26ECh. 7 - Prob. 7.27ECh. 7 - Prob. 7.28ECh. 7 - Prob. 7.29ECh. 7 - Prob. 7.30ECh. 7 - Impairments of Notes Receivable Appendix 7B At...Ch. 7 - Prob. 7.32ECh. 7 - Prob. 7.33ECh. 7 - Prob. 7.34ECh. 7 - Uncollectible accounts; allowance method; income...Ch. 7 - Uncollectible accounts; Amdahl LO75 Real World...Ch. 7 - Bad debts; Nike, Inc. LO75 Real World Financials...Ch. 7 - Uncollectible accounts LO75, LO76 Raintree...Ch. 7 - Prob. 7.5PCh. 7 - Notes receivable; solving for unknowns LO77...Ch. 7 - Prob. 7.7PCh. 7 - Prob. 7.8PCh. 7 - Prob. 7.9PCh. 7 - Prob. 7.10PCh. 7 - Prob. 7.11PCh. 7 - Accounts and notes receivable; discounting a note...Ch. 7 - Prob. 7.13PCh. 7 - Prob. 7.14PCh. 7 - Prob. 7.15PCh. 7 - Prob. 7.16PCh. 7 - Prob. 7.17PCh. 7 - Prob. 7.1BYPCh. 7 - Prob. 7.2BYPCh. 7 - Prob. 7.3BYPCh. 7 - Real World Case 74 Sales returns; Green Mountain...Ch. 7 - Ethics Case 75 Uncollectible accounts LO75 You...Ch. 7 - Prob. 7.6BYPCh. 7 - Prob. 7.7BYPCh. 7 - Prob. 7.8BYPCh. 7 - Prob. 7.9BYPCh. 7 - Prob. 7.10BYPCh. 7 - Prob. 7.11BYPCh. 7 - Prob. 1CCTC
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