Gemstone Products 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 2016 and 2015 fiscal years included the following ($ in thousands): 2016 2015 Current assets: Receivables, less allowances of $131,720 in 2016 and $87,320 in 2015 $ 459,700 $ 440,400 A disclosure note accompanying the financial statements reported the following ($ in thousands) Year Ended 2016 (In thousands) 2015 (In thousands) Calculation of account receivables, net: Receivables $ 591,420 $ 527,720 Less: allowance for doubtful accounts (122,960) (77,660) Less: reserve for product returns (8,760) (9,660) Trade accounts receivable, net: $ 459,700 $ 440,400 Assume that the company reported bad debt expense in 2016 of $191,400 and had products returned for credit totaling $187,060 (sales price). Net sales for 2016 were $5,598,800 ($ in thousands). Required: What is the amount of accounts receivable due from customers at the end of 2016 and 2015? What amount of accounts receivable did Gemstone write off during 2016? What is the amount of Gemstone's gross sales for the 2016 fiscal year? Assuming that all sales are made on a credit basis, what is the amount of cash Gemstone collected from customers during the 2016 fiscal year?

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter7: Receivables And Investments

Section: Chapter Questions

Problem 7.3DC

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Gemstone Products 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 2016 and 2015 fiscal years included the following ($ in thousands):

	2016	2015
Current assets:
Receivables, less allowances of $131,720 in 2016 and $87,320 in 2015	$ 459,700	$ 440,400

A disclosure note accompanying the financial statements reported the following ($ in thousands)

	Year Ended
2016 (In thousands)	2015 (In thousands)
Calculation of account receivables, net:
Receivables	$ 591,420	$ 527,720
Less: allowance for doubtful accounts	(122,960)	(77,660)
Less: reserve for product returns	(8,760)	(9,660)
Trade accounts receivable, net:	$ 459,700	$ 440,400

Assume that the company reported bad debt expense in 2016 of $191,400 and had products returned for credit totaling $187,060 (sales price). Net sales for 2016 were $5,598,800 ($ in thousands).

Required:

What is the amount of accounts receivable due from customers at the end of 2016 and 2015?
What amount of accounts receivable did Gemstone write off during 2016?
What is the amount of Gemstone's gross sales for the 2016 fiscal year?
Assuming that all sales are made on a credit basis, what is the amount of cash Gemstone collected from customers during the 2016 fiscal year?

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