The MGM Mirage owns and operates casinos including the MGM Grandand the Bellagio in Las Vegas. As of December 31, 2006, the MGM Mirage reported accounts and notes receivable of $452,945,000 and allowance for doubtful accounts of $90,024,000. Johnson & Johnson manufactures and sells a wide range of health careproducts including Band-Aids and Tylenol. As of December 31, 2006, Johnson & Johnson reported accounts receivable of$8,872,000,000 and allowance for doubtful accounts of $160,000,000.
Compute the percentage of allowance for doubtful accounts to the total accounts and notes receivable as of December31, 2006, for the MGM Mirage.
Compute the percentage of the allowance for doubtful accounts to the accounts receivable as of December 31, 2006, for Johnson & Johnson.
Discuss possible reasons for the difference in the tworatios computed in (a) and (b).