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(Solved) (Latest ver. Aug 2020) - Interpreting Accounts Receivable

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Interpreting Accounts Receivable and Its Footnote Disclosure
Following is the current asset section from the W.W. Grainger, Inc., balance sheet.

As of December 31 ($ 000s)200720062005
Cash and cash equivalents$ 113,437$ 348,471$ 544,894
Marketable securities at cost, which approximate market value 20,07412,827--
Accounts receivable (less allowances for
doubtful accounts of $25,830, $18,801
and $18,401, respectively) 602,650566,607518,625
Inventories, net 946,327827,254791,212
Prepaid expenses and other assets61,66658,80454,334
Deferred income taxes56,66348,12376,474
Prepaid income taxes--

Total current assets$ 1,800,817$ 1,862,086$ 1,985,539

Grainger reports the following footnote relating to its receivables.
Allowance for Doubtful Accounts: The following table shows the activity in the allowance for doubtful accounts.
For Years ended December 31 ($ 000s)200720062005
Allowance for doubtful accounts- accounts receivable
Balance at beginning of period$ 18,801$ 18,401$ 23,375
Provision for uncollectable accounts15,4366,0571,326
Write-off of uncollectible accounts, less recoveries(8,755)(5,660)(6,380)
Foreign currency exchange impact348380
________________________________________
Balance at end of period$ 25,830$ 18,801$ 18,401

(a) What amount do customers owe Grainger at each of the year-ends 2005 through 2007?
($ 000s)200720062005

Gross accounts receivable$ $ $

(b) What percentage of its total accounts receivable does Grainger feel are uncollectible? Hint: Percentage of uncollectible accounts = Allowance for uncollectible accounts/Gross accounts receivable. Round your answers to two decimal places.
($ 000s)200720062005
Percentage of uncollectible accounts to gross accounts receivable%% %

(c) What amount of bad debts expense did Grainger report in its income statement for each of the years 2005 through 2007?
($ 000s)200720062005
Bad debts expense (titled Provision for Uncollectible Accounts)$ $ $

Land, Building and Equipment, Net
(in millions)20072006
Land $ 146$ 142
Buildings and improvements2,0001,900
Machinery and equipment6,2505,850
Capitalized interest352340
Construction in progress271218
________________________________________
Land, Building and Equipment, Gross9,0198,450
Less: Accumulated depreciation5,908 5,481
________________________________________
Total$ 3,111$ 2,969

(b) Evett and Sternard reported depreciation expense of $412 million in 2007. Estimate the useful life, on average, for its depreciable PPE assets. (Round your answer to two decimal places.)

(c) By what percentage are Evett and Sternard's assets "used up" at year-end 2007? (Round your answer to two decimal places.)

 







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