Question

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 $133,425 in 2016 and $89,025 in 2015 $ 461,900 $ 441,500 A disclosure note accompanying the financial statements reported the following ($ in thousands) Year Ended 2016 2015 (In thousands) Calculation of account receivables, net: Receivables $ 595,325 $ 530,525 Less: allowance for doubtful accounts (123,125 ) (77,825 ) Less: reserve for product returns (10,300 ) (11,200 ) Trade accounts receivable, net: $ 461,900 $ 441,500 Assume that the company reported bad debt expense in 2016 of $192,500 and had products returned for credit totaling $187,225 (sales price). Net sales for 2016 were $5,653,800 ($ in thousands). Required: 1. What is the amount of accounts receivable due from customers at the end of 2016 and 2015

Answer 1

Answer:

Required:

1. What is the amount of accounts receivable due from customers at the end of 2016 and 2015?

2. What amount of accounts receivable did Gemstone write off during 2016?

3. What is the amount of Gemstone's gross sales for the 2016 fiscal year?

1.  Particulars                                   2016          2015

Accounts receivables (Net)        $461,900    $441,500

Add: Allowances                         $133,425    $89,025  

Accounts receivables (gross)   $595,325   $530,525

2. Particulars                                                                        Amount

Allowance for doubtful accounts: Beginning balance     $77,825

Add: Bad debt expenses                                                    $192,500

Less: Closing balance end of the year                               $123,125

Bad debts written off in 2016                                            $147,200

3. Particulars                                           Amount

Balance, end of the year                        $10,300

Add: Actual returns                                 $187,225

Less: Balance, beginning of the year    $11,200  

Estimated sales returns                         $186,325

Gross sales for the year = Net sales + Estimated sales returns

Gross sales for the year = $5,653,800 + $186,325

Gross sales for the year 2016 = $5,840,125