subject
Business, 07.03.2020 02:43 missbecca1229p6glel

Interpreting the Accounts Receivable Footnote
Hewlett-Packard Company reports the following in its 2015 10-K report.

October 31
(in millions)
2015
2014
Accounts receivable $13,363 $13,832

Footnotes to the company's 10-K provide the following additional information relating to its allowance for doubtful accounts.

For the fiscal years ended October 31
(in millions)
2015
2014
2013
Allowance for doubtful accounts-accounts receivable
Balance, beginning of period $232 $332 $464
Provision for doubtful accounts 46 25 23
Deductions, net of recoveries (89) (125) (155)
Balance, end of period $189 $232 $332

(a) What is the gross amount of accounts receivables for Hewlett-Packard in fiscal 2015 and 2014?

($ millions) 2015 2014
Gross accounts receivable Answer Answer

(b)What is the percentage of the allowance for doubtful accounts to gross accounts receivable for 2015 and 2014? (Round your answers to two decimal places.)

($ millions) 2015 2014
Percentage of uncollectible accounts to gross accounts receivable Answer% Answer%

(c)What amount of bad debts expense did Hewlett-Packard report each year 2013 through 2015 (ignore increase in allowance from acquisitions)? What amount was actually written off?

($ millions) 2015 2014 2013
Bad debt expense $Answer $Answer $Answer
Amounts actually written off $Answer $Answer $Answer

Which of the following statements describes how bad debts expense compares with the amounts of its accounts receivable actually written off?

Generally, HP has overestimated its accruals, which has deflated profit by the over-accrual of bad debts.

Generally, HP has underestimated its accruals, which has inflated profit by the under-accrual of bad debts.

The difference between bad debt expense and write-off during the three years is insignificant so it appears that profit has been fairly stated.

The difference between bad debt expense and write-off during the three years has inflated HPQ's cash flows reported.

(d)Compute Hewlett-Packard's write-offs as a percentage of the allowance account at the beginning of the year.
(Round your answers to two decimal places)
2015 write-offs as a percentage of beginning of year allowance: Answer%
2014 write-offs as a percentage of beginning of year allowance: Answer%
What inferences can we draw as a result of changes in the allowance for doubtful accounts from 2014 to 2015?

The allowance for uncollectible accounts has increased as a percentage of gross accounts receivable in 2015. We can , therefore, expect write-offs to increase.

HPQ's write-offs as a percentage of the allowance decreased from 2014-2015. By this measure it appears that HPQ is accurately accruing for anticipated credit losses.

The allowance for uncollectible accounts has decreased as a percentage of gross accounts receivable in 2015. This means that HPQ is over-stating its bad debt expense in the current year.

HPQ's write-offs as a percentage of the allowance increase from 2014 to 2015. This may imply that the allowance is too small.

ansver
Answers: 1

Another question on Business

question
Business, 22.06.2019 04:50
Harwood company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. the company's predetermined overhead rate of $2.50 per machine-hour was based on a cost formula that estimates $240,000 of total manufacturing overhead for an estimated activity level of 96,000 machine-hours. required: 1. assume that during the year the company works only 91,000 machine-hours and incurs the following costs in the manufacturing overhead and work in process accounts: compute the amount of overhead cost that would be applied to work in process for the year and make the entry in your t-accounts. 2a. compute the amount of underapplied or overapplied overhead for the year and show the balance in your manufacturing overhead t-account. 2b. prepare a journal entry to close the company's underapplied or overapplied overhead to cost of goods sold.
Answers: 1
question
Business, 22.06.2019 10:50
Suppose that a firm is considering moving from a batch process to an assembly-line process to better meet evolving market needs. what concerns might the following functions have about this proposed process change: marketing, finance, human resources, accounting, and information systems?
Answers: 2
question
Business, 22.06.2019 11:50
What is marketing’s contribution to the new product development team? a. technical expertise needed to translate designs into an actual product/service. b. deep customer insight that leads to product ideas. c. ability to assess financial viability d. feedback on design as well as how customers will actually use the product e. technical expertise needed to translate concepts into product/service designs.
Answers: 2
question
Business, 22.06.2019 14:10
When a shortage or a surplus arises in the loanable funds market a. the supply of loanable funds changes to return the economy to its original real interest rate b. the nominal interest rate is pulled to the new equilibrium level c. the demand for loanable funds changes to return the economy to its original real interest rate d. the real interest rate is pulled to the new equilibrium level
Answers: 3
You know the right answer?
Interpreting the Accounts Receivable Footnote
Hewlett-Packard Company reports the following in...
Questions
question
Mathematics, 01.04.2020 22:20
question
Mathematics, 01.04.2020 22:21
question
Mathematics, 01.04.2020 22:21
question
Mathematics, 01.04.2020 22:21
question
Mathematics, 01.04.2020 22:21
question
Chemistry, 01.04.2020 22:21