The XYZ Corporation owns and operates casinos. For a recent year, The XYZ Corporation reported accounts and notes receivable of $381,000 and allowance for doubtful accounts of $77,724. Patient Care manufactures and sells a wide range of health care products. For a recent year, Patient Care reported notes and accounts receivable of $931,000 and allowance for doubtful accounts of $47,481. Round your percentage answers to one decimal place. a. Compute the percentage of the allowance for doubtful accounts to the accounts and notes receivable for The XYZ Corporation. % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care.

The XYZ Corporation owns and operates casinos. For a recent year, The XYZ Corporation reported accounts and notes receivable of $381,000 and allowance for doubtful accounts of $77,724. Patient Care manufactures and sells a wide range of health care products. For a recent year, Patient Care reported notes and accounts receivable of $931,000 and allowance for doubtful accounts of $47,481. Round your percentage answers to one decimal place. a. Compute the percentage of the allowance for doubtful accounts to the accounts and notes receivable for The XYZ Corporation. % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter9: Receivables

Section: Chapter Questions

Problem 5CP

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The XYZ Corporation owns and operates casinos. As of a recent year, The XYZ Corporation reported accounts receivable of $663,000 and allowance for doubtful accounts of $80,886. Patient Care manufactures and sells a wide range of health care products. As of a recent year, Patient Care reported accounts receivable of $888,000 and allowance for doubtful accounts of $15,984. Round your answers to one decimal place. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for The XYZ Corporation. % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care. % c. Possible reasons for the difference in the two ratios computed in (a) and (b) include: Casino operators historically lose money on operations. Casino operators have larger accounts receivable. Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caught up in the excitement…
At the beginning of the year, the credit balance in the Allowance for Doubtful Accounts for Healthcare Inc. was $80,000. The provision (expense) for doubtful accounts is computed based on a percentage of net credit sales. Total sales revenue for the year amounted to $30 million, of which one-third was on credit. Based on the latest available information, the provision needed for doubtful accounts is estimated to be 0.75% of net credit sales. During the year, uncollectible receivables amounting to $88,000 were written off. a. Compute the ending balance in the Allowance for Doubtful Accounts at December 31. b. Prepare its entries (1) to write off uncollectible accounts and (2) to recognize bad debt expense. c. At the end of the year, the allowance is estimated based on the following aging of accounts receivable. What is the estimated Allowance for Doubtful Accounts balance at December 31? d. What information is available from the aging analysis in part c that is not apparent when using…
The basis for recognizing patient care revenue is not always obvious. In a particular month Northwest Medical Clinic reported the following: 1. It provided direct care services to patients, billing them $400,000. Of this amount it received $120,000 in cash, but as a consequence of bad debts it expects to collect a total of only $330,000. 2. It provided direct care to patients covered by insurance and who are members of various group health plans for which, at standard rates, it would have billed $650,000. However, owing to contractual arrangements with the payers, it actually billed them for, and expects to collect, only $480,000. 3. It provided charity care for which it would have billed, at standard rates, $82,000. 4. It received capitation fees of $1,400,000 from health care plans and provided services to members of those plans for which it would have billed, at standard rates, $1,600,000. Prepare appropriate journal entries to recognize revenue.
Assume selected financial data for Sun Health Group and Select Medical Corporation, two companies in the health-care industry, are as follows: ($ in millions) Net Sales Beginning AccountsReceivable Ending AccountsReceivable Sun Health $1,930 $215 $202 Select Medical 2,240 414 353 Required: 1. Calculate the receivables turnover ratio and average collection period for Sun Health and Select Medical. Round your answers to one decimal place. Compare your calculations with those for Tenet Healthcare and LifePoint Hospitals reported in the chapter text. Which of the four companies maintains a higher receivables turnover? 2. How does the receivables turnover ratio reflect the efficiency of management? Discuss factors that affect the receivables turnover ratio.
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 $350,000 and allowance for doubtful accounts of $53,550. 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 $929,000 and allowance for doubtful accounts of $35,302. Round your answers to one decimal place. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for The XYZ Corporation.fill in the blank 1 % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care.fill in the blank 2 % c. Possible reasons for the difference in the two ratios computed in (a) and (b) include: Casino operators historically lose money on operations. Casino operators have larger accounts…
By the end of its first year of operations, Previts Corporation has credit sales of $750,000 and accounts receivable of $350,000. Given it’s the first year of operations, Previts’ management is unsure how much allowance for uncollectible accounts it should establish. One of the company’s competitors, which has been in the same industry for an extended period, estimates uncollectible accounts to be 2% of ending accounts receivable, so Previts decides to use that same amount. However, actual write-offs in the following year were 25% of the $350,000 (= $87,500). Previts’ inexperience in the industry led to making sales to high credit risk customers.Required:1. Record the adjustment for uncollectible accounts at the end of the first year of operations using the 2% estimate of accounts receivable.2. By the end of the second year, Previts has the benefit of hindsight to know that estimates of uncollectible accounts in the first year were too low. By how much did Previts underestimate…
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 $570,348,000 and allowance for doubtful accounts of $89,789,000. Johnson & Johnson (JNJ) manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a recent year, J&J reported accounts receivable of $11,002,000,000 and allowance for doubtful accounts of $268,000,000. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM. Round your answer to one decimal place.fill in the blank 1 % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Johnson & Johnson. Round your answer to one decimal place.fill in the blank 2 %
Rose Corporation sells upscale lamps to boutiques across the country. The average net trade accounts receivable for Rose is $540,000. In addition, the company has average net sales of $6,950,000. Calculate Rose's accounts receivable turnover. Round your answer to two decimal places.
By the end of its first year of operations, Previts Corporation has credit sales of $690,000 and accounts receivable of $290,000. Given it’s the first year of operations, Previts’ management is unsure how much allowance for uncollectible accounts it should establish. One of the company’s competitors, which has been in the same industry for an extended period, estimates uncollectible accounts to be 2% of ending accounts receivable, so Previts decides to use that same amount. However, actual write-offs in the following year were 25% of the $290,000 (= $72,500). Previts’ inexperience in the industry led to making sales to high credit risk customers. 3. Should Previts prepare new financial statements for the first year of operations to show the correct amount of uncollectible accounts? Yes No
By the end of its first year of operations, Previts Corporation has credit sales of $690,000 and accounts receivable of $290,000. Given it’s the first year of operations, Previts’ management is unsure how much allowance for uncollectible accounts it should establish. One of the company’s competitors, which has been in the same industry for an extended period, estimates uncollectible accounts to be 2% of ending accounts receivable, so Previts decides to use that same amount. However, actual write-offs in the following year were 25% of the $290,000 (= $72,500). Previts’ inexperience in the industry led to making sales to high credit risk customers. Required: 1. Record the adjustment for uncollectible accounts at the end of the first year of operations using the 2% estimate of accounts receivable. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Journal entry worksheet Record the adjusting…
By the end of its first year of operations, Previts Corporation has credit sales of $690,000 and accounts receivable of $290,000. Given it’s the first year of operations, Previts’ management is unsure how much allowance for uncollectible accounts it should establish. One of the company’s competitors, which has been in the same industry for an extended period, estimates uncollectible accounts to be 2% of ending accounts receivable, so Previts decides to use that same amount. However, actual write-offs in the following year were 25% of the $290,000 (= $72,500). Previts’ inexperience in the industry led to making sales to high credit risk customers. 2. By the end of the second year, Previts has the benefit of hindsight to know that estimates of uncollectible accounts in the first year were too low. By how much did Previts underestimate uncollectible accounts in the first year? How did this underestimation affect the reported amounts of total assets and expenses at the end of the…
During the current year, Watanabe’s Camera Shop had sales revenue of $210,000, of which $86,400 was on credit. At the start of the current year, Accounts Receivable showed a $19,200 debit balance and the Allowance for Doubtful Accounts showed a $440 credit balance. Collections of accounts receivable during the current year amounted to $72,000. The Company uses the percentage of receivables method to account for its estimated uncollectible accounts. Data during the current year follow: a. On December 31, an Accounts Receivable from a deadbeat customer (Melania Trump, Wedding Photographer) of $3,400 from a prior year was determined to be uncollectible; therefore it was written off immediately as a bad debt. b. On December 31, on the basis of experience, a decision was made to continue the accounting policy of basing estimated uncollectible accounts on 2 percent of the end balance of accounts receivable. What is the Company’s bad debt expense for the year?