Reformulating Allowance for Doubtful Accounts and Bad Debt Expense Merck & Company reported the following from its 2016 financial statements. $ millions 2013 2014 2015 2016 Accounts receivable, net $7,185 $6,627 $6,485 $7,017 Allowance for doubtful accounts 153 160 172 201 a. Compute accounts receivable gross for each year. $ millions 2013 2014 2015 2016 Accounts receivable, gross $Answer 7,338 $Answer 6,787 $Answer 6,657 $Answer 7,218 b. Determine the percentage of allowance to gross account receivables for each year. Round answers to two decimal places (ex: 0.02345 = 2.35%). 2013 2014 2015 2016 % allowance Answer 2.09 % Answer 2.36 % Answer 2.58 % Answer 2.78 % c. Assume that we want to reformulate the balance sheet and income statement to reflect a constant percentage of allowance to gross accounts receivables for each year. Compute the four-year average and then reformulate the balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 5.2 and assume a tax rate of 35%. Four- year average of percentage of allowance to gross accounts receivables. Round answer to two decimal places (ex: 0.02345 = 2.35%) Answer 2.45 % Reformulate the balance sheet and income statements. Round answers to one decimal place. Use negative signs with answers to indicate the adjustment decreases an account. 2013 2014 2015 2016 Adjusted allowance for doubtful accts. $Answer 179.8 $Answer 166.3 $Answer 163.1 $Answer 176.8

e Accumo that we want to reformulate the balance sheet and income statement 10 Tellett a LOTISLIL Perlella LU aluvun balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 52 and a Four-year average of percentage of allowance to gross accounts receivables. Round answer to two decimal places (ex: 0.02345 = 2.356) 2.45 Reformulate the balance sheet and income statements Round answers to one decimal place! Use negative signs with answers to indicate the adjustment decreases an account 2013 2014 2015 2016 Adjusted allowance for doubtful accts. SN 179.8WPS 156.BV $ 163,1 $ 176.8 Balance Sheets Adjustments Allowance for doubtful accounts Accounts receivable, net Deferred tax liabilities Retained Earnings Income Statements Adjustments Bad debts expense oo Income tax expense at 3596 OOO Net Income Check Partially correct Marloes for this submission: O 1 2 0 2 0 Module 5 HW - Go... O HELP ME ANSWER ... 9 57,185 S6, 627 56,48... e Accumo that we want to reformulate the balance sheet and income statement 10 Tellett a LOTISLIL Perlella LU aluvun balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 52 and a Four-year average of percentage of allowance to gross accounts receivables. Round answer to two decimal places (ex: 0.02345 = 2.356) 2.45 Reformulate the balance sheet and income statements Round answers to one decimal place! Use negative signs with answers to indicate the adjustment decreases an account 2013 2014 2015 2016 Adjusted allowance for doubtful accts. SN 179.8WPS 156.BV $ 163,1 $ 176.8 Balance Sheets Adjustments Allowance for doubtful accounts Accounts receivable, net Deferred tax liabilities Retained Earnings Income Statements Adjustments Bad debts expense oo Income tax expense at 3596 OOO Net Income Check Partially correct Marloes for this submission: O 1 2 0 2 0 Module 5 HW - Go... O HELP ME ANSWER ... 9 57,185 S6, 627 56,48