Inferring Bad Debt Write-Offs and Cash Collections from Customers
Microsoft 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).

According to its Form 10-K, Microsoft recorded bad debt expense of $88 and did not reinstate any previously written-off accounts during the current year.
Required:
1. What amount of bad debts was written off during the current year?
2. Based on your 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 openaccount.

Transcribed Image Text:

Current Year Prior Year Accounts receivable, net of allowances of $153 and $117 $13,589 60,420 $11,338 51,122 Net revenues