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11 December, 21:55

The 2013 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 for the year?

(A) $27 million

(B) $178 million

(C) $118 million

(D) $151 million

(E) None of the above

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  1. 11 December, 21:59
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    Oracle Corporation report as bad debt expense for the year: $118 million

    Explanation:

    allowance at the end of the year - allowance at the beginning of the year + accounts written off during the year = bad debt expense for the year

    $296 million - $323 million + $145 million = $118 million

    The accounts written off during the year increase the expense because they are uncollectible so there were removed from a receivable account in the general ledger. The way to do so is:

    A credit to Accounts Receivable, and a debit to Allowance for Doubtful Accounts
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