Exercise 7-4 Using an Aging Schedule to Account for Bad Debts LO1 Carter Company sells on credit with terms of n/30. For the $500,000 of accounts at the end of EXAMPL the year that are not overdue, there is a 90% probability of collection. For the $200,000 of accounts that are less than a month past due, Carter estimates the likelihood of collection going down to 70%. The probability of collecting the $100,000 of accounts more than a month past due is estimated to be 25%. Required 1. Prepare an aging schedule to estimate the amount of uncollectible accounts. 2. On the basis of the schedule in part (1), prepare the journal entry at the end of the year to esti- mate bad debts. Assume that the credit balance in Allowance for Doubtful Accounts is $20,000. La Turnover for Nike LO2 LO2 EXAMPLE REAL WORLD Exercise 7-5 Accounts Receivable Turnover for Nike The financial statements included in the 2014 Form 10-K of Nike reported the following amounts (in millions of dollars): Revenues, for the year ended May 31, 2014 $27,799 Accounts receivable, net, May 31, 2014 3,434 Accounts receivable, net, May 31, 2013 3,117 Required 1. Compute Nike's accounts receivable turnover ratio for the year ended May 31, 2014. (Assume that all sales are on credit.) 4. What is the average collection period in days for an account receivable? Explain your answer. Give some examples of the types of customers you would expect Nike to have. Do you think the average collection period for sales to these customers is reasonable? What other informa tion do you need to fully answer that question? Show me how