Question

Apple’s balance sheet for the most recent fiscal year in Appendix A (page A-2) at the back of the book yields the following information related to accounts receivable:

Accounts Receivable $17,932,000,000

Allowance for Doubtful Accounts 58,000,000

Accounts Receivable, Net $17,874,000,000

Provide several sentences in your own words to describe the meaning of each line item and related dollar amount shown above for Accounts Receivable, Allowance for Doubtful Accounts, and Accounts Receivable, Net. Be specific as to what each line item and related dollar amount represents.

Answer 1

Account receivable is the amount which is outstanding from the customers which are yet to be received. This amount denotes the asset of the company as it is amount receivable from the customers.

Allowance for doubtful account is recorded in case of any doubtful debtors which the company thinks that it will not be able to collect from the customer. This amount is reduced from the account receivable as it is uncollectible.

Net account receivable is the net amount of account receivable which is the total debtors amount less the allowance for doubtful account.

Net account receivable = Account receivable - Allowance for doubtful account

= 17,932,000,000 - 58,000,000

= 17,874,000,000.