9.1

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 $732,000 and allowance for doubtful accounts of $90,036. Patient Care manufactures and sells a wide range of healthcare products including Band-Aid bandages and Tylenol. As of a recent year, Patient care reported accounts receivable of $958,000 and allowance for doubtful accounts of $38,320. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for the XYZ Corporation. Round your answer to one decimal place. 12.3 % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care. Round your answer to one decimal place. % c. Possible reasons for the difference in the two ratios computed in (a) and (b) include: a. Casino operators historically lose money on operations. b. Casino operators have larger accounts receivable. c. 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 gamblik). d. Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casino a and b X