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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Research and Analysis Using the Annual Report

Obtain Whirlpool’s Fiscal 2016 10-K (filed Feb. 13, 2017) through the "Investor Relations" portion of its website (do a web search for Whirlpool investor relations). Once at the Investor Relations section of the website, look for "SEC Filings" under the "FINANCIAL INFORMATION" header. When you see the list of all the filings, either filter for the "Annual Filings" or search for "10-K." Another option is to go to www.sec.gov and click "Company Filings Search" under "Filings."

Required:

Was a larger percentage of the gross accounts receivable considered uncollectible at fiscal year end 2015 or 2016?

To determine

Concept introduction:

Allowance for doubtful debts:

Companies generally make credit sales to improve their business and expand their customer base. When a credit sales is made the amount that the company has to receive from its customers is known as receivable. Usually all the customers does not repay the amount they owe to the company and hence there are chances of some not repaying the amount and these are called as bad debts. The company usually estimates that a portion of its receivables will become bad debts and create provisions for the same. This provision is called as allowance for doubtful debts.

Receivables:

Companies generally make credit sales to improve their business and expand their customer base. When a credit sales is made the amount that the company has to receive from its customers is known as receivable. Usually company all the customers does not repay the amount they owe to the company and hence there are chances of some not repaying the amount and these are called as bad debts. The company usually estimates that a portion of its receivables will become bad debts and create provisions for the same. Therefore the bad debts for the year is adjusted by transferring the amount to allowance for bad debts account.

In fiscal yearend 2015 or in 2016 did Whirlpool considered that a larger percentage of the gross accounts receivable will be uncollectible?

Explanation

The allowance for doubtful accounts values of Whirlpool has been taken from the Sec.gov website. The allowance for doubtful accounts balance at December 31st 2015 is160 million and at December 31st 2016 is 185 million...

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