Part A Bad Debt Journal Entries and Calculations

Assume that Dyson Repair has the following balances as of Jan 1, 2023:		Accounts Receivable
Accounts Receivable (gross)		600,000		600,000
Allowance for Doubtful Accounts		30,000
During 2023, Dyson had credit sales of $3,100,000 and collected $3,000,000 on prior credit sales. Dysons policy is to write off receivables that are more than 120 days past due. During 2023, Dyson wrote off $25,000 of its receivables and recovered a $5,000 receivable that it had previously written off. At December 31, 2023, an aging of Dysons accounts receivable looks as follows:
Allowance for Doubtful Accounts
Category		Amount		% Estimated Uncollectible				30,000
Current		$550,000		2%
1-30 days past due		$80,000		20%
31-90 days past due		$30,000		30%
91-120 days past due		$15,000		80%

1. Provide the journal entries Dyson made to record the following transactions:
2. 2023 credit sales of $3,100,000

1. Collection of $3,000,000 on prior credit sales

1. Write off of $25,000 receivables

1. Recoveries of $5,000

1. Adjusting entry to record 2023 bad debt expense (assume Dyson uses the A/R Aging method to estimate future bad debts)

What is Accounts Receivable, net on Dysons Dec. 31, 2023 Balance Sheet?

What is Bad Debt Expense on Dysons 2023 Income Statement?

Part B Accounts Receivable Financial Statement Inferences

Use the financial statements to answer the following questions.

1. What were Verizons gross accounts receivable, net accounts receivable, and allowance for doubtful accounts as of December 31, 2022 and December 31, 2021? How much bad debt expense did Verizon record in 2022 and 2021?

	As of Dec 31, 2022	As of Dec 31, 2021
Gross Accounts Receivable
Allowance for Doubtful Accounts
Net Accounts Receivable

	For the year ended Dec 31, 2022	For the year ended Dec 31, 2021
Bad Debt Expense

1. What percent of receivables did Verizon reserve for at the end of 2022 and 2021?

	As of Dec 31, 2022	As of Dec 31, 2021
Percent of Receivables Reserved For

1. Calculate Verizons Days Receivable (i.e., the average number of days the receivables were outstanding) for 2022 and 2021.

	2022	2021
Days Receivable

Did Verizon collect its receivables faster in 2021 or in 2022?

1. How many receivables did Verizon write off in 2022 and 2021?

Hint: To compute these amounts, you may want to create Verizons 2022 and 2021 Allowance for Doubtful Accounts t-accounts. Ignore recoveries in your analysis.

	For the year ended Dec 31, 2022	For the year ended Dec 31, 2021
Bad Debt Write-offs

\begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|c|}{ConsolidatedBalanceSheetsInmillionsofdollars} \\ \hline ASSETS & AsofDec31,2022 & AsofDec31,2021 & AsofDec31,2020 \\ \hline Cash and cash equivalents & $4,111 & $4,161 & $23,498 \\ \hline Accountsreceivable,netallowancefordoubtfulaccountsof$826at12/31/22,$896at12/31/21and$1,252at12/31/20 & 24,506 & 23,846 & 23,917 \\ \hline Inventories & 2,388 & 3,055 & 1,796 \\ \hline Prepaid expenses and other current assets & 6,852 & 5,666 & 5,383 \\ \hline Total current assets & 37,857 & 36,728 & 54,594 \\ \hline Property and equipment, net & 107,434 & 99,696 & 94,833 \\ \hline Equity method investments & 1,071 & 1,061 & 589 \\ \hline Wireless licenses & 149,796 & 147,619 & 96,097 \\ \hline Goodwill & 28,671 & 28,603 & 24,773 \\ \hline Other intangible assets, net & 11,461 & 11,677 & 9,413 \\ \hline Operating lease right-of-use assets & 26,130 & 27,883 & 22,531 \\ \hline Other long-term assets & 17,260 & 13,329 & 13,651 \\ \hline Total assets & $379,680 & $366,596 & $316,481 \\ \hline \multicolumn{4}{|l|}{ LIABILITIES \& EQUITY } \\ \hline Debt maturing within one year & $9,963 & $7,443 & $5,889 \\ \hline Accounts payable and accrued liabilities & 23,977 & 24,833 & 20,658 \\ \hline Other current liabilities & 16,231 & 14,884 & 13,113 \\ \hline Total current liabilities & 50,171 & 47,160 & 39,660 \\ \hline Long-term debt & 140,676 & 143,425 & 123,173 \\ \hline Employee benefit obligations & 12,974 & 15,410 & 18,657 \\ \hline Deferred income taxes & 43,441 & 40,685 & 35,711 \\ \hline Operating lease liabilities & 21,558 & 23,203 & 18,000 \\ \hline Other long-term liabilities & 18,397 & 13,513 & 12,008 \\ \hline Total liabilities & 287,217 & 283,396 & 247,209 \\ \hline Common stock \& additional paid in capital & 13,849 & 14,290 & 13,833 \\ \hline Treasury stock & (4,013) & (4,104) & (6,719) \\ \hline Retained earnings & 82,380 & 71,993 & 60,464 \\ \hline Accumulated other comprehensive income & (1,072) & (389) & 264 \\ \hline Noncontrolling interests & 1,319 & 1,410 & 1,430 \\ \hline Total shareholders' equity & 92,463 & 83,200 & 69,272 \\ \hline Total liabilities and shareholders' equity & $379,680 & $366,596 & $316,481 \\ \hline \end{tabular} CONSOLIDATED STATEMENTS OF CASH FLOWS In millions of dollars \begin{tabular}{|c|c|c|c|} \hline & YearendedDec31,2022 & YearendedDec31,2021 & YearendedDec31,2020 \\ \hline \multicolumn{4}{|l|}{ OPERATING ACTIVITIES } \\ \hline Net Income & $21,748 & $22,618 & $18,348 \\ \hline \multicolumn{4}{|l|}{ Adjustments: } \\ \hline Depreciation and amortization expense & 17,099 & 16,206 & 16,720 \\ \hline Employee retirement benefits & (2,046) & (3,391) & 840 \\ \hline Deferred income taxes & 2,973 & 4,264 & 1,553 \\ \hline Bad debt expense & 1,611 & 789 & 1,380 \\ \hline Loss/(gain) from equity method investments & (10) & 36 & 91 \\ \hline Other, net & (3,778) & (93) & 2,780 \\ \hline \multicolumn{4}{|l|}{ Changes in assets and liabilities: } \\ \hline Accounts receivable & (1,978) & (1,592) & 189 \\ \hline Inventories & 627 & (905) & (369) \\ \hline Prepaid expenses and other & 928 & 150 & 1,202 \\ \hline Accounts payable and other current liabilities & (33) & 1,457 & (966) \\ \hline Net cash provided by operating activities & 37,141 & 39,539 & 41,768 \\ \hline \multicolumn{4}{|l|}{ INVESTING ACTIVITIES } \\ \hline Purchases of PP\&E & (23,087) & (20,286) & (18,192) \\ \hline Acquisitions of businesses, net of cash acquired & 248 & (4,065) & (520) \\ \hline Acquisitions of wireless licenses & (3,653) & (47,596) & (3,896) \\ \hline Proceeds from dispositions of businesses & 33 & 4,122 & - \\ \hline Other, net & (2,203) & 672 & (904) \\ \hline Net cash used in investing activities & (28,662) & (67,153) & (23,512) \\ \hline \multicolumn{4}{|l|}{ FINANCING ACTIVITIES } \\ \hline Proceeds from issuance of debt & 17,912 & 41,417 & 31,457 \\ \hline Repayments of debt & (13,564) & (18,863) & (17,188) \\ \hline Dividends paid & (10,805) & (10,445) & (10,232) \\ \hline Other, net & (2,072) & (3,832) & (2,712) \\ \hline Net cash provided by/(used in) financing activities & (8,529) & 8,277 & 1,325 \\ \hline NET INCREASE IN CASH \& CASH EQUIVALENTS & (50) & (19,337) & 19,581 \\ \hline CASH \& CASH EQUIVALENTS, BEGINNING OF PERIOD & 4,161 & 23,498 & 3,917 \\ \hline CASH \& CASH EQUIVALENTS, END OF PERIOD & $4,111 & $4,161 & $23,498 \\ \hline \end{tabular} DESCRIPTION OF BUSINESS. Verizon Communications Inc. is one of the world's leading providers of communications, technology, information and entertainment products and services to consumers, businesses and governmental agencies. With a presence around the world, we offer data, video and voice services and solutions on our networks and platforms that are designed to meet customers' demand for mobility, reliable network connectivity, security and control. ALLOWANCE FOR DOUBTFUL ACCOUNTS. Accounts receivable are recorded at cost less an allowance for doubtful accounts that are not expected to be recovered. We maintain allowances for doubtful accounts resulting from the expected failure or inability of our customers to make required payments. We recognize the allowance for doubtful accounts at inception and reassess quarterly based on management's expectation of the asset's collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, such as the COVID-19 pandemic, as well as management's expectations of conditions in the future, as applicable. Our allowance for doubtful accounts is based on management's assessment of the collectability of assets pooled together with similar risk characteristics