excercise 7-2,7-4

Determine the amount of bad debts expense for 2017. 2. Exercise 7-4 Using an Aging Schedule to Account for Bad Debts LO1 Carter Company sells on credit with terms of n/30. For the $500,000 of accounts at the end of EXAMPLE 7 the year that are not overdue, there is a 90% probability of collection. For the $200,000 of accounts that are less than a month past due, Carter estimates the likelihood of collection going down to 70%. The probability of collecting the $100,000 of accounts more than a month past due is estimated to be 25%. Required 1. Prepare an aging schedule to estimate the amount of uncollectible accounts. 2. On the basis of the schedule in part (1), identify and analyze the adjustment needed to estimate bad debts. Assume that the balance in Allowance for Doubtful Accounts is $20,000. Exercise 7-5 Accounts Receivable Turnover for Nike The financial statements included in the 2015 Form 10-K of Nike reported the following amounts (in millions of dollars): LO2 7-6 Revenues, for the year ended May 31, 2015 Accounts receivable, net, May 31, 2015 Accounts receivable, net, May 31, 2014 $30,601 3,358 3,434 REAL WORLD Required 1. Compute Nike's accoun Show (Assume that all sales are on credit.) Vhat is the average collection period in days for an account receivable? Explain your answer Giye some examples of the types of customers you would expect Nike to have. Do you think the average collection period for sales to these custome tion do you need to fully answer that question? me how 3. rs is reasonable? What other informa