(Module 5 Question 3) Please answer all questions with a red X next to them. Thank you!

QUESTION 3 Partially correct Mark0.32 out of 1.00 Flag question Reformulating Allowance for Doubtful Accounts and Bad Debt Expense Merck & Company reported the following from its 2016 financial statements. $ millions 2013 2014 2015 2016 Accounts receivable, net $7,689 $7,128 $6,988 $7,520 Allowance for doubtful accounts 147 156 168 204 a. Compute accounts receivable gross for each year $ millions 2013 2014 2015 2016 Accounts receivable, gross7,836$7,2847,156 7,724 b. Determine the percentage of allowance to gross account receivables for each year Round answers to two decimal places (ex: 0.02345-2.3596). 2013 2014 2015 2016 6 allowance 1.88 96 2.14 % 2.35 % 2.64 c. Assume that we want to reformulate the balance sheet and income statement to reflect a constant percentage of allowance to gross accounts receivables for each year. Compute the four-year average and then reformulate the balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 5.2 and assume a tax rate of 35%. Four-year average of percentage of allowance to gross accounts receivables. Round answer to two decimal places (ex: 0.02345 2.35%) 2.25 % Reformulate the balance sheet and income statements. Use rounded answer above for computations, then round answers to one decimal place . Use negative signs with answers to indicate the adjustment decreases an account. 2013 2014 2015 2016 Adjusted allowance for doubtful accts. $ 147.3 164 X$ 61 174 X Balance Sheets Adjustments Allowance for doubtful accounts 147 X 164 X 161 X 174 X Accounts recelvable, net 7,689 x 7,128 6.995 7,550 Deferred tax liobilities Retained Earnings 19 X (5) x (19) X Income Statements Adjustments Bad debts expense Income tax expense at 35% Net Income Check