2005 $544,894 Interpreting Accounts Receivable and Its Footnote Disclosure Following is the current asset section from the W.W. Grainger, Inc., balance sheet. As of December 31 ($ 000s) Cash and cash equivalents Marketable securities at cost, which approximate market value Accounts receivable (less allowances fordoubtful accounts of $25,830, $18,801 and $18,401, respectively Inventories, net Prepaid expenses and other assets Deferred income taxes Prepaid income taxes Total current assets 2007 $113,437 20,074 602,650 946,327 61,666 56,663 2006 $348,471 12,827 566,607 827,254 58,804 48,123 518,625 791,212 54,334 76,474 $ 1,800,817 $ 1,862,086 $ 1,985,539 Grainger reports the following footnote relating to its receivables. Allowance for Doubtful Accounts: The following table shows the activity in the allowance for doubtful accounts. 2007 2006 2005 For Years ended December 31 ($ 000s) Allowance for doubtful accounts-accounts receivable Balance at beginning of period Provision for uncollectable accounts Write-off of uncollectible accounts, less recoveries Foreign currency exchange impact Balance at end of period $ 18,801 $ 18,401 $ 23,375 15,436 6,057 1,326 (8,755) (5,660) (6,380) 348 3 80 $ 25,830 $ 18,801 $ 18,401 (a) What amount do customers owe Grainger at each of the year-ends 2005 through 2007? ($ 000s) 2007 2006 2005 Gross accounts receivable $ (b) What percentage of its total accounts receivable does Grainger feel are uncollectible? Hint: Percentage of uncollectible accounts = Allowance for uncollectible accounts/Gross accounts receivable. Round your answers to two decimal places. 2007 2006 ($ 000s) Percentage of uncollectible accounts to gross accounts receivable 2005 C % (c) What amount of bad debts expense did Grainger report in its income statement for each of the years 2005 through 2007? ($ 000s) 2007 2006 2005 Bad debts expense (titled Provision for Uncollectible Accounts) $ (d) Since 2005, did the allowance for uncollectible accounts increase or decrease as a percentage of gross accounts receivable? The allowance for uncollectible accounts remained relatively the same as a percentage of gross accounts receivable. The allowance for uncollectible accounts has decreased as a percentage of gross accounts receivable. The allowance for uncollectible accounts has increased as a percentage of gross accounts receivable. (e) If Grainger had kept its 2007 allowance for uncollectible accounts at the same percentage of gross accounts receivable as it was in 2005, by what amount would its profit have changed (ignore taxes)? HINT: Use rounded answer from part b to calculate. Round answer to the nearest thousands. Profit would by $ $ 000s)