1.Gross casino accounts receivable. Because in Exhibit 1a, bring in accounts receivable are consisted of three parts of accounts receivable which includes 174,713, and one complete allowance for dubitable accounts. So $174,713 is a gross number.
2.a. The entirety flip of allowance for questionable accounts is consisted of three parts: Writeoffs pull up stakes cause debits; recoveries pull up stakes cause credits; bad debts expenses forget cause debits or credits. So we have the following equation:
change in allowance for ambiguous accounts=bad debts expense-net writeoffs
therefore, net writeoffs= bad debts expense- change in allowance for provisionary accounts.
Writeoffs of 2003=12,570*95%-(75,265-85,504)=$22,181
Writeoffs of 2004=(-3,629)*95%-(57,111-75,265)=$14,706
b. Writeoffs will decrease the amount of allowance for doubtful accounts and accounts receivable at the same time, so there is no impact on the amount of net accounts receivable and score assets. Recoveries will increase the amount of bills and allowance for doubtful accounts, so the amount of net accounts receivable will decrease. however the total assets also wont change. And neither writeoffs nor the recoveries will have an impact on the income statements.
3.
There are fin accounts involved in transactions of accounts receivable: accounts receivable, allowance for doubtful accounts, bad debts expense, sales, and cash. So we have the following equation:
change in cash+(change in accounts receivable-change in allowance for doubtful accounts)
=sales bad debt expense
Now we calculate the cash show of 2003 step by step.
substitute in accounts receivable=159,569-166,612=-$7,043
Change in allowance for doubtful accounts=75,265-85,504=-$10,239
Sales=2,037,514*40%=$815,006
self-aggrandizing debt expense=12,570*95%=$11,942
Cash collections of 2003=(815,006-11,942)-[(-7,043)-(-10,239)]=$799,868
We can calculate the cash collections of 2004 in the same way.
Cash collections of 2004
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