Interpreting the Accounts Receivable Footnote HP Inc. reports the following in its 2018 10-K report. October 31 (in millions) 2018 2017 Accounts receivable $5,113 $4,414 Footnotes to the company's 10-K provide the following additional information relating to its allowance for doubtful accounts. For the fiscal years ended October 31 (in 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 $107 (a) What is the gross amount of accounts receivables for HP in fiscal 2018 and 2017? ($ millions) 2018 2017 Gross accounts receivable Answer Answer (b)What is the percentage of the allowance for doubtful accounts to gross accounts receivable for 2018 and 2017? (Round your answers to two decimal places.) ($ millions) 2018 2017 Percentage of uncollectible accounts to gross accounts receivable Answer Answer (c)What amount of bad debts expense did HP report each year 2016 through 2018? What amount was actually written off? ($ millions) 2018 2017 2016 Bad debt expense Answer Answer Answer Amounts actually written off Answer Answer Answer Which of the following statements describes how bad debts expense compares with the amounts of its accounts receivable actually written off? Generally, HP has overestimated its accruals, which has deflated profit by the over-accrual of bad debts. Generally, HP has underestimated its accruals, which has inflated profit by the under-accrual of bad debts. The difference between bad debt expense and write-off during the three years is insignificant so it appears that profit has been fairly stated. The difference between bad debt expense and write-off during the three years has inflated HPQ's cash flows reported. (d)Compute HP write-offs as a percentage of the allowance account at the beginning of the year. (Round your answers to two decimal places) 2017 write-offs as a percentage of beginning of year allowance: Answer% 2018 write-offs as a percentage of beginning of year allowance: Answer%
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Interpreting the
HP Inc. reports the following in its 2018 10-K report.
| October 31 (in millions) |
2018 |
2017 |
|---|---|---|
| Accounts receivable | $5,113 | $4,414 |
Footnotes to the company's 10-K provide the following additional information relating to its allowance for doubtful accounts.
| For the fiscal years ended October 31 (in 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 | $107 |
(a) What is the gross amount of accounts receivables for HP in fiscal 2018 and 2017?
| ($ millions) | 2018 | 2017 |
|---|---|---|
| Gross accounts receivable | Answer | Answer |
(b)What is the percentage of the allowance for doubtful accounts to gross accounts receivable for 2018 and 2017? (Round your answers to two decimal places.)
| ($ millions) | 2018 | 2017 |
|---|---|---|
| Percentage of uncollectible accounts to gross accounts receivable | Answer | Answer |
(c)What amount of
| ($ millions) | 2018 | 2017 | 2016 |
|---|---|---|---|
| Bad debt expense | Answer | Answer | Answer |
| Amounts actually written off | Answer | Answer | Answer |
Which of the following statements describes how bad debts expense compares with the amounts of its accounts receivable actually written off?
(d)Compute HP write-offs as a percentage of the allowance account at the beginning of the year.
(Round your answers to two decimal places)
2017 write-offs as a percentage of beginning of year allowance: Answer%
2018 write-offs as a percentage of beginning of year allowance: Answer%
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