Inferring Bad Debt Write-Offs and Cash Collections fromCustomers
Micro soft develops, produces, and markets a wide range of computer software, including the Windows operating system. On its recent financial statements, Microsoft reported the following information about net sales revenue and accounts receivable (amounts in millions).
| Current Yea r | Prior Year |
Accounts receivable. net of allowances of $153 and $ 117 Net revenues | $ 13.589 60,420 | $ 11.338 51,122 |
According to its Form 10-K, Microsoft recorded bad debt expense of 588 and did not rein state any previously written-off accounts during the current year (Hint: Refer to the summary of the effects of accounting for bad debt s on the Accounts Receivable (Gross) and the Allowance for Doubtful Accounts T-accounts. Use the T-accounts to solve for the missing value s.)
Required:
1. What amount of bad debt s was written off during the current year?
2. Based on you r answer to requirement (1), solve for cash collected from customers for the current year, assuming that all of Microsoft’s sales during the period were on open account
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