This problem takes you through the accounting for sales, receivables, and un-collectibles for FedEx Corporation, the overnight shipper. By selling on credit, FedEx cannot expect to collect 100% of its accounts receivable. Assume that at May 31, 2017 and 2016, respectively, FedEx reported the following on its balance sheet (adapted and in millions of U.S. dollars):

_________________________________________________________________________________ May 31

______________________________________________________________________ 2017 _______ 2016

Accounts receivable........................................................................ $4,517 .........$4,078

Less: Allowance for un-collectibles................................................. (318) ............ (136)

Accounts receivable, net............................................................... $4,199 ..........$3,942

During the year ended May 31, 2017, FedEx earned service revenue and collected cash from customers. Assume bad debt expense for the year was $380 million and that FedEx wrote off uncollectible receivables.

Requirements

1. Prepare T-accounts for Accounts Receivable and Allowance for Un-collectibles, and insert the May 31, 2016, balances as given.

2. Journalize the following assumed transactions of FedEx for the year ended May 31, 2017.

Explanations are not required.

a. Service revenue on account, $37,953 million

b. Collections on account, $37,314 million

c. Bad debt expense, $380 million

d. Write-offs of uncollectible accounts receivable, $200 million

e. Recovered an account receivable, $2 million

3. Post your entries to the Accounts Receivable and the Allowance for Un-collectibles T-accounts.

4. Compute the ending balances for the two T-accounts, and compare your balances to the actual May 31, 2017 amounts. They should be the same.

5. Show what FedEx would report on its income statement for the year ended May 31, 2017?