Question

The annual report of Oracle Corporation included the following information relating to their allowance for doubtful accounts: Balance in allowance at the beginning of the year $323 million, accounts written off during the year of $145 million, balance in allowance at the end of the year $296 million. What did Oracle Corporation report as bad debt expense on the income statement for the year

Answer 1

Answer:

Oracle Corporation reported $118 million as bad debt expense on the income statement for the year.

Explanation:

This can be calculated using the following formula:

Balance in allowance at the end of the year = Balance in allowance at the beginning of the year + Bad debt expense - Accounts written off during the year ......................... (1)

Where:

Balance in allowance at the end of the year = $296 million

Balance in allowance at the beginning of the year = $323 million

Bad debt expense = ?

Accounts written off during the year = $145 million

Substituting the values into equation (1) and solve for Bad debt expense, we have:

$296 million = $323 million + Bad debt expense - $145 million

Bad debt expense = $296 million - $323 million + $145 million

Bad debt expense = $118 million

Therefore, Oracle Corporation reported $118 million as bad debt expense on the income statement for the year.