Question

Minta Corporation is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2017 financial statements contain the following information ($ in millions):

	2017	2018
Balance sheets:
Accounts receivable, net	$ 3,952	$3,516
Income statements:
Sales revenue	$ 35,125	$ 33,151

A note disclosed that the allowance for uncollectible accounts had a balance of $24 million and $48 million at the end of 2017 and 2016, respectively. Bad debt expense for 2017 was $45 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 2017 and 2016?
2. What is the amount of bad debt write-offs during 2017?
3. Analyze changes in the gross accounts receivable account to calculate the amount of cash received from customers during 2017.
4. Analyze changes in net accounts receivable to calculate the amount of cash received from customers during 2017.
  

Answer 1

1					2017	2016
	Accounts receivable,net				3952	3516
	Add:Allowance for uncollectible accounts				24	48
	Gross (total) accounts receivable				3976	3564
2	Bad debt written-off during 2017:
	Analyze allowance for uncollectible accounts
					$
	Beginning balance				48
	Add: Bad debt expense				45
					93
	Less:Ending balance				24
	Bad debt written-off				69
3	Cash received from customers:
					$
	Sales revenue				35125
	Less;Increase in accounts receivable (Gross)
	(Note:1)				481
	Cash received from customers				34644
	Note:1
	Increase in accounts receivable (Gross)=Ending balance of accounts receivable-(Beginning balance of accounts receivable-Write-offs)=3976-(3564-69)=$ 481
4	Cash received from customers:
	Analyze accounts receivable,net
					$	$
	Beginning balance					3516
	Add: Sales revenue					35125
						38641
	Less:
	Baddebt expense				45
	Ending balance				3952	3997
	Cash received from customers					34644