Question
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
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).
Current Year | Prior Year | |||
Accounts receivable, net of allowances of $134 and $128 | $ | 13,489 | $ | 10,838 |
Net revenues | 60,720 | 53,022 | ||
|
According to its Form 10-K, Microsoft recorded bad debt expense of $94 and there were no bad debt recoveries during the current year. (Hint: Refer to the summary of the effects of accounting for bad debts on the Accounts Receivable (Gross) and the Allowance for Doubtful Accounts T-accounts. Use the T-accounts to solve for the missing values.)
Required:
1.What amount of bad debts was written off during the current year? (Enter your answers in millions not in dollars.)
2. Based on your answer to requirement (1), solve for cash collected from customers for the current year, assuming that all of Microsofts sales during the period were on open account. (Enter your answers in millions not in dollars.)
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