Information regarding the accounts receivable for Nike, Inc. is on the next page. Using this information, answer the following questions.

1. Why does Nike maintain an allowance for doubtful accounts? (2 points)

2. What is the amount in the allowance for doubtful accounts based on: (4 points)

A.

B.

C.

D.

3. At May 31, 2022

A. How much was the allowance for uncollectible accounts? (2 points)

B. How much was the net realizable value of accounts receivable? (2 points)

4. Page 8-5 of our text discusses ways businesses can decrease their collection time and credit risk. (5 points)

A. If a business factors its receivables, from whom does the business collect cash?

B. Does the business receivables the full value of the receivables factored? How much will the business receive?

C. If a business pledges its receivables, from whom does the business collect cash?

NIKE, INC.

CONSOLIDATED BALANCE SHEETS

			MAY 31,
(In millions)			2022			2021
ASSETS
Current assets:
Cash and equivalents			$	8,574		$	9,889
Short-term investments			4,423			3,587
Accounts receivable, net			4,667			4,463
Inventories			8,420			6,854
Prepaid expenses and other current assets			2,129			1,498
Total current assets			28,213			26,291

DESCRIPTION OF BUSINESS

NIKE, Inc. is a worldwide leader in the design, development and worldwide marketing and selling of athletic footwear, apparel, equipment, accessories, and services.

ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE

Accounts receivable, net consist primarily of amounts due from customers. The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains an allowance for expected losses resulting from the inability of its customers to make required payments. In addition to judgments about the creditworthiness of significant customers based on ongoing credit evaluations, the Company considers historical levels of credit losses, as well as macroeconomic and industry trends to determine the amount of the allowance. Accounts receivable with anticipated collection dates greater than 12 months from the balance sheet date and related allowances are considered non-current and recorded in Deferred income taxes and other assets. The allowance for uncollectible accounts receivable was $34 million and $93 million as of May 31, 2022 and 2021, respectively.