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Adjusting Allowance for Doubtful Accounts and Bad Debts Expense Merck & Company reported the following from its 2019 financial statements. $ millions Accounts receivable,
Adjusting Allowance for Doubtful Accounts and Bad Debts Expense Merck & Company reported the following from its 2019 financial statements. $ millions Accounts receivable, net Allowance for doubtful accounts 2016 2017 2018 2019 $7,018 $6,873 $7,071 $6,778 195 159 119 86 a. Compute accounts receivable gross for each year. $ millions 2016 2017 2018 2019 Accounts receivable, gross $ 7,213 $ 7,032 S 7,190 $ 6,864 b. Determine the percentage of allowance to gross account receivables for each year. Round answers to two decimal places (ex: 0.02345 = 2.35%). % allowance 2016 2.7% 2017 2.26% 2018 1.66% 2019 1.25% c. Assume that we want to reformulate the balance sheet and income statement to reflect a constant percentage of allowance to gross accounts receivables for each year. Compute the four-year average and then reformulate the balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 5.2 and assume a tax rate of 22% in all three years. Four-year average of percentage of allowance to gross accounts receivables. Round answer to two decimal places (ex: 0.02345 = 2.35%) 1.98
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