Solution-Nature of uncollectible accounts

Nature of uncollectible accounts

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Reference no: EM133205590

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 $440,000 and allowance for doubtful accounts of $62,040 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 $964,000 and allowance for doubtful accounts of $38,560.

Round all amounts 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:

Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caught up in the excitement of gambling.

Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casino.

Reference no: EM133205590

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Nature of uncollectible accounts

Reference no: EM133205590

Reference no: EM133205590

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