Allowance for Doubtful Accounts

12 Months Ended

Jan. 01, 2022

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Since mid-March 2020, our business has been significantly impacted by the COVID-19 pandemic. Starting in March 2020, in order to reduce the spread of COVID-19 and its variants, many countries, including the United States, took steps to restrict travel, temporarily close or enforce capacity restrictions on businesses, schools and other public gathering spaces, including restaurants and recreational, sporting and other similar venues. Due to the impact that the COVID-19 pandemic was expected to have on our customers, particularly our restaurant and hospitality customers, and to reflect the increased collection risk associated with our customers, we significantly increased our allowance for doubtful accounts during the 13 weeks ended March 28, 2020. Since that initial charge in 2020, due to more favorable than anticipated collections on our pre-COVID-19 accounts receivable, we reduced our allowance for doubtful accounts. All pre-COVID-19 accounts receivable have been collected or written off by the end of fiscal year 2021.

A summary of the activity in the allowance for doubtful accounts for the last three fiscal years is as follows:


	2021		2020		2019
Balance as of beginning of year	$	67	$	30	$	29
(Benefit) Charged to costs and expenses, net	(24)		63		21
Adoption of ASU 2016-13	—		1		—
Customer accounts written off—net of recoveries	(10)		(27)		(20)
Balance as of end of year	$	33	$	67	$	30

This table excludes the vendor receivable related allowance for doubtful accounts of $7 million, $5 million, and $4 million as of January 1, 2022, January 2, 2021, and December 28, 2019, respectively.

At the beginning of fiscal year 2020, the Company adopted the provisions of ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which resulted in the recording of a cumulative-effect adjustment to retained earnings of $1 million.