AT&T's Financial Statements for the 2015 and 2014 Fiscal Years

question 13

Essay

AT&T's financial statements for the 2015 and 2014 fiscal years contained the following information:
Balance Sheets ($ in millions) 2015 2014
Current assets:
Accounts receivable, net of allowances for
doubtful accounts of $704 and $454 $16,532 $14,527
Income Statements ($ in millions) 2015 2014
Revenues $146,801 $132,447
In addition, the statement of cash flows disclosed bad debt expense of $1,416 million in 2015 and $1,032 million in 2014.
Required:
1. Determine the amount of actual bad debt write-offs made during 2015.
2. Determine the amount of cash collected from customers during 2015.
3. Compute the receivables turnover ratio for 2015.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Variable Costing

An accounting method that only includes variable production costs (materials, labor) in product cost, excluding fixed costs.

Mixed Cost

A cost that has both fixed and variable components, which changes with the level of output but not in direct proportion.

Fixed Manufacturing Costs

Overhead expenses that do not vary with production level, such as rent, salaries, and utility costs in a manufacturing environment.