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P 7-5 Receivables; bad debts and returns; Avon Products, Inc Page 404 LO7-4 , LO7-5 Real World Financials Avon Products, Inc., located in New York City, is one of the world's largest producers of beauty and related products. The company's consolidated balance sheets for the 2015 and 2014 fiscal years included the following ($ in thousands): 2015 2014 Current assets: Receivables, less allowances of $86,700 in 2015 and $106,900 in 2014 $443.000 $515,600 A disclosure note accompanying the financial statements reported the following (S in thousands) Year Ended 2015 2014 Calculation ofaccount receivables, net $529,700 $622,500 Receivables (77,600) Less: allowance for doubtful accounts (93,700) (9,100) Less: reserve for product returns (13,200) Trade accounts receivable, net: $443,000 $515,600 Assume that the company reported bad debt expense in 2015 of $144,100 and had products returned for credit totaling S6,800 (sales price). Net sales for 2015 were S6,076,500 (S in thousands) Required: 1. What is the amount of accounts receivable due from customers at the end of 2015 and 2014? 2. What amount of accounts reccivable did Avon write off during 2015? 3. What is the amount of Avon's gross sales for the 2015 fiscal year? 4. Assuming that all sales are made on a credit basis, what is the amount of cash Avon collected from customers during the 2015

Answer 1

Part 1

year	Accounts receivable
2015	$529700
2014	$622500

Part 2

Amount written off (2015) = $160200

Amount written off = bad debt expense + allowance for doubtful accounts (2014) – allowance for doubtful accounts (2015) = (144100+93700-77600) = 160200

Part 3

Gross sales = $6227400

Gross sales = net sales + bad debt expense + sales return = 6076500+144100+6800

Part 4

Cash collected = $6160000

Cash collected =receivables (2015) +gross sales – receivables (2014) – amount written off 622500+6227400 -529700-160200 = 6160000