Shaw Communications Inc. is a diversified Canadian communications company whose core operating business is providing broadband cable
Question:
Additional details about Shaw's receivables include the following:
Bad debt expense (or provision for doubtful accounts, as Shaw calls it) of $38 (2013, $26; 2012, $30) is included in operating, general, and administrative expenses. Shaw writes off uncollectible accounts receivable against the allowance account based on the age of the account and payment history.
Instructions
(a) Calculate the current ratios, acid-test ratios, receivables turn- over ratios, and average collection periods for fiscal 2014 and 2013. Comment on Shaw's liquidity for each of the years.
(b) Based on the information provided, calculate the amount of accounts receivable that was written off in 2014.
(c) Shaw indicates in its notes to the financial statements that it reduces the risk of uncollectible accounts by billing in advance of providing service. How does billing in advance of providing service reduce the risk of uncollectible accounts?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Accounting Principles
ISBN: 978-1119048503
7th Canadian Edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak