Question

Minta Corporation is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2017 financial...

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 2016
Balance sheets:
Accounts receivable, net $ 3,897 $ 3,461
Income statements:
Sales revenue $ 34,970 $ 32,996


A note disclosed that the allowance for uncollectible accounts had a balance of $23 million and $47 million at the end of 2017 and 2016, respectively. Bad debt expense for 2017 was $44 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.

Business   Accounting   
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Homework Answers

Answer #1

1. Gross accounts receivable at end of 2017 = $3,897 + $23 = $3,920 Million

Gross accounts receivable at end of 2016 = $3,461 + $47 = $3,508 Million

2. Bad debts written of during 2017 = Bad debt expense + Decrease in Allowance for uncollectible accounts = $44 + ($47-$23) = $68 Million

3. Cash Received from Customers = Opening Gross A/R + Revenue - Closing Gross A/R - Bad Debts written off during 2017 = $3,508 + $34,970 - $3,920 - $68 = $34,490 Million

4. Cash Received from Customers = Opening Net A/R + Revenue - Closing Net A/R - Bad Debts Expense = $3,461 + $34,970 - $3,897 - $44 = $34,490 Million

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