The financial statements of Procter & Gamble (P&G) can be accessed at the book’s website.

Instructions

Refer to P&G’s financial statements and the accompanying notes to answer the following questions.

(a) What criteria does P&G use to classify “Cash and cash equivalents” as reported in its balance sheet?

(b) As of June 30, 2006, what balances did P&G have in cash and cash equivalents? What were the major uses of cash during the year?

(c) P&G reports no allowance for doubtful accounts, suggesting that bad debt expense is not material for this company. Is it reasonable that a company like P&G would not have material bad debt expense? Explain.