Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Nike, Incorporated, is a leading manufacturer of sports apparel, shoes, and equipment. The companys 2020 financial statements contain the following information ($ in millions): 2020

Nike, Incorporated, is a leading manufacturer of sports apparel, shoes, and equipment. The companys 2020 financial statements contain the following information ($ in millions):

2020 2019
Balance sheets:
Accounts receivable, net $ 2,749 $ 4,272
Allowance for uncollectible accounts 214 30
Income statements:
Sales revenue $ 37,403
Statement of Cash Flows:
Amortization, impairment and other 398
Decrease in accounts receivable 1,239

Assume that all sales are made on a credit basis.

Required:

  1. What is the amount of gross (total) accounts receivable due from customers at the end of 2020 and 2019?
  2. Assume that bad debt expense is included in amortization, impairment and other, such that the 2020 decrease in accounts receivable of $1,239 reflects only the difference between sales and collections. Prepare a T account that depicts how sales, collections, bad debt expense, and writeoffs of bad debts affect the balance of net accounts receivable with a debit, a credit or not at all, and estimate Nikes 2020 bad debt expense.
  3. Prepare a T account that depicts how bad debt expense and writeoffs of bad debts affect the balance of the allowance for uncollectible accounts with a debit, credit or not at all, and estimate the amount of bad debts written off by Nike during 2020.
  4. Analyze changes in the gross accounts receivable account to calculate the amount of cash received from customers during 2020.
  5. Analyze changes in the following Accounts Receivable (net) T-account to calculate the amount of cash received from customers during 2020.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Survey of Accounting

Authors: Thomas P. Edmonds, Frances M. McNair, Philip R. Olds, Bor Yi

3rd Edition

978-1259683794, 77490835, 1259683796, 9780077490836, 978-0078110856

More Books

Students also viewed these Accounting questions