nta Corporation, is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2020 financial statements contain the following information ($ in millions): 2020 2019 Balance sheets: Accounts receivable, net $ 2,804 $ 4,327 Allowance for uncollectible accounts 215 33 Income statements: Sales revenue $ 37,558 Statement of Cash Flows: Amortization, impairment and other 399 Decrease in accounts receivable 1,240
nta Corporation, is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2020 financial statements contain the following information ($ in millions): 2020 2019 Balance sheets: Accounts receivable, net $ 2,804 $ 4,327 Allowance for uncollectible accounts 215 33 Income statements: Sales revenue $ 37,558 Statement of Cash Flows: Amortization, impairment and other 399 Decrease in accounts receivable 1,240
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Minta Corporation, is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2020 financial statements contain the following information ($ in millions):
2020 | 2019 | |
---|---|---|
Accounts receivable, net | $ 2,804 | $ 4,327 |
Allowance for uncollectible accounts | 215 | 33 |
Income statements: | ||
Sales revenue | $ 37,558 | |
Statement of Cash Flows: | ||
Amortization, impairment and other | 399 | |
Decrease in accounts receivable | 1,240 |
Assume that all sales are made on a credit basis.
Required:
- What is the amount of gross (total) accounts receivable due from customers at the end of 2020 and 2019?
- Assume that bad debt expense is included in “amortization, impairment and other,” such that the 2020 decrease in accounts receivable of $1,240 reflects only the difference between sales and collections. Prepare a T account that depicts how sales, collections, bad debt expense, and writeoffs of
bad debts affect the balance of net accounts receivable with a debit, a credit or not at all, and estimate Minta’s 2020 bad debt expense. - Prepare a T account that depicts how bad debt expense and writeoffs of bad debts affect the balance of the allowance for uncollectible accounts with a debit, credit or not at all, and estimate the amount of bad debts written off by Minta during 2020.
- Analyze changes in the gross accounts receivable account to calculate the amount of cash received from customers during 2020.
- Analyze changes in net accounts receivable to calculate the amount of cash received from customers during 2020.
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