Response to the following problem:
MGM Resorts International owns and operates casinos including the MGM Grand and the Bellagio in Las Vegas, Nevada. For a recent year, the MGM Resorts International reported accounts and notes receivable of $415,654,000 and allowance for doubtful accounts of $93,760,000.
International Business Machines (IBM) provides information technology services, including software, worldwide. For a recent year, IBM reported accounts receivable of $10,834,000,000 and allowance for doubtful accounts of $324,000,000.
a. Compute the percentage of the allowance for doubtful accounts to the accounts and notes receivable for the MGM Mirage.
b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for IBM.
c. Discuss possible reasons for the difference in the two ratios computed in (a) and (b).