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 $440,000 and allowance for doubtful accounts of $62,040 Patient Care manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a recent year, Patient Care reported accounts receivable of $964,000 and allowance for doubtful accounts of $38,560.

Round all amounts to one decimal place.

a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for the XYZ Corporation. %

b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care. %

c. Possible reasons for the difference in the two ratios computed in (a) and (b) include: