Question

Megasoft Corporation develops, produces, and markets a wide range of computer software including the Windows operating system. Megasoft reported the following information about Net Sales Revenue and Accounts Receivable (all amounts in millions).June 30, 2016 June 30, 2015Accounts Receivable, Net of Allowance for Doubtful Accounts of $310 and $360 $ 16,950 $ 15,700Net Revenues 68,000 62,000According to its Form 10-K, Megasoft recorded Bad Debt Expense of $22 and did not recover any previously written-off accounts during the year ended June 30, 2016.Required:What amount of accounts receivable was written off during the year ended June 30, 2016? (Enter your answer in millions.)What was Megasoft’s receivables turnover ratio in 2016? (Round your answer to 1 decimal place.)

Answer 1

Megasoft Corporation

1. The amount of accounts receivable that was written off during the year ended June 30, 2016 was:

= $72 million

2. Receivable Turnover Ratio in 2016

= 2016 Net Sales/Average receivables

= $68,000/$16,660 = 4.1

Step-by-step explanation:

a) Data and Calculations:

June 30, 2016 June 30, 2015

Net Sales Revenue $68,000 $62,000

Accounts Receivable

(all amounts in millions) $17,260 $16,060

Allowance for

Doubtful Accounts of 310 360

Net Accounts receivable $ 16,950 $ 15,700

Bad Debts Expense = $22

Allowance for Doubtful Accounts

Date Account Titles Debit Credit

June 30, 2015 Beginning balance $310

2016 Bad Debts Expense 22

2016 Accounts receivable 72

June 30, 2016 Ending balance $360

Accounts Receivable

Date Account Titles Debit Credit

June 30, 2015 Beginning balance $16,060

2016 Net sales 68,000

2016 Allowance for Doubtful $72

2016 Cash 66,728

June 30, 2016 Ending balance $17,260

Average receivables = $16,660 ($16,060 + $17,260)/2

Receivable Turnover Ratio in 2016

= 2016 Net Sales/Average receivables

= $68,000/$16,660 = 4.1