ES-46. Interpreting the Accounts Receivable Footnote HP Inc. reports the following in its 2018 10-K report.

October 31 ($ millions)

Accounts receivable ................................ .

2018

$5, 113 2017

$4,414 Footnotes to the company's 10-K provide the following additional information relating to its allowance for doubtful accounts.

For Fiscal Years Ended October 31 ($ millions) 2018 2017 2016 Allowance for doubtful accounts-accounts receivable Balance, beginning of period . ....... ..................... $101 $107 $ 80 Provision for doubtful accounts ............................ 57 30 65 Deductions, net of recoveries . ....... . ...... . .......... . .. (29) (36) (38)

Balance, end of period ............................ . ..... $129 $101 $107

a. What is the gross amount of accounts receivables for HP in fiscal 2018 and 2017?

b. What is the percentage of the allowance for doubtful accounts to gross accounts receivable for 20 18 and 2017?

c. What amount of bad debts expense did HP report each year 2016 through 2018? How does bad debts expense compare with the amounts of its accounts receivable actually written off? (Identify the amounts and explain.)

d. Explain the changes in the allowance for doubtful accounts from 2016 through 2018. Does it appear that HP increased or decreased its allowance for doubtful accounts in any particular year beyond what seems reasonable?

LOS HP INC. (HPQ) •