Excerpts from Pekola Company's annual report are provided below:
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(In millions)
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Income Statement
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2014
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2013
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Revenues (all on account)
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$17,154
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$15,998
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Net income
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6,606
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2,296
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Balance Sheet
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Current Assets:
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Receivables, less allowance for uncollectibles of $338 and $308, respectively
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$ 3,052
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$ 3,078
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Footnotes
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Provision for uncollectibles
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$ 385
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$ 355
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1. Are estimated uncollectibles increasing or decreasing as percentage of revenues?
2. What is meant by provision for uncollectibles? Why is this reported in the notes?
3. What amount of write-offs occurred during 2014? (remember the handy household hints for solving almost any weird accounting problem)
4. What was the cash collected on accounts receivables during 2014? (are you interested in gross or net receivables for this question???)
5. What would you do with the provision for uncollectibles when preparing the statement of cash flows (indirect)? Why?