Using the balance sheet of Google provided in the next page, answer the followin
ID: 2332298 • Letter: U
Question
Using the balance sheet of Google provided in the next page, answer the following questions
As of December 31st, 2005, how much does Google expect to collect from its customers in the future because of sales that were made prior to January 1st, 2006?
Assume that Google had written off $2,500 (thousand) of its accounts receivable as permanently uncollectible during the year ended December 31st, 2005. How much bad debt expense did Google record during 2005?
Google Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
December 31,
2004
2005
Assets
Current assets:
Cash and cash equivalents
$
426,873
$
3,877,174
Marketable securities
1,705,424
4,157,073
Accounts receivable, net of allowances of $3,962 and $14,852
311,836
687,976
Income taxes receivable
70,509
—
Deferred income taxes, net
19,463
49,341
Prepaid revenue share, expenses and other assets
159,360
229,507
Total current assets
2,693,465
9,001,071
Property and equipment, net
378,916
961,749
Goodwill
122,818
194,900
Intangible assets, net
71,069
82,783
Deferred income taxes, net, non-current
11,590
—
Prepaid revenue share, expenses and other assets, non-current
35,493
31,310
Total assets
$
3,313,351
$
10,271,813
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
32,672
$
115,575
Accrued compensation and benefits
82,631
198,788
Accrued expenses and other current liabilities
64,111
114,377
Accrued revenue share
122,544
215,771
Deferred revenue
36,508
73,099
Income taxes payable
—
27,774
Current portion of equipment leases
1,902
—
Total current liabilities
340,368
745,384
Deferred revenue, long-term
7,443
10,468
Liability for stock options exercised early, long-term
5,982
2,083
Deferred income taxes, net
—
35,419
Other long-term liabilities
30,502
59,502
Commitments and contingencies
Stockholders’ equity:
Class A and Class B common stock, $0.001 par value: 9,000,000 shares authorized at December 31, 2004 and December 31, 2005, 266,917, and 293,027 shares issued and outstanding, excluding 7,605, and 3,303 shares subject to repurchase (see Note 10) at December 31, 2004 and December 31, 2005
267
293
Additional paid-in capital
2,582,352
7,477,792
Deferred stock-based compensation
(249,470
)
(119,015
)
Accumulated other comprehensive income
5,436
4,019
Retained earnings
590,471
2,055,868
Total stockholders’ equity
2,929,056
9,418,957
Total liabilities and stockholders’ equity
$
3,313,351
$
10,271,813
December 31,
2004
2005
Assets
Current assets:
Cash and cash equivalents
$
426,873
$
3,877,174
Marketable securities
1,705,424
4,157,073
Accounts receivable, net of allowances of $3,962 and $14,852
311,836
687,976
Income taxes receivable
70,509
—
Deferred income taxes, net
19,463
49,341
Prepaid revenue share, expenses and other assets
159,360
229,507
Total current assets
2,693,465
9,001,071
Property and equipment, net
378,916
961,749
Goodwill
122,818
194,900
Intangible assets, net
71,069
82,783
Deferred income taxes, net, non-current
11,590
—
Prepaid revenue share, expenses and other assets, non-current
35,493
31,310
Total assets
$
3,313,351
$
10,271,813
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
32,672
$
115,575
Accrued compensation and benefits
82,631
198,788
Accrued expenses and other current liabilities
64,111
114,377
Accrued revenue share
122,544
215,771
Deferred revenue
36,508
73,099
Income taxes payable
—
27,774
Current portion of equipment leases
1,902
—
Total current liabilities
340,368
745,384
Deferred revenue, long-term
7,443
10,468
Liability for stock options exercised early, long-term
5,982
2,083
Deferred income taxes, net
—
35,419
Other long-term liabilities
30,502
59,502
Commitments and contingencies
Stockholders’ equity:
Class A and Class B common stock, $0.001 par value: 9,000,000 shares authorized at December 31, 2004 and December 31, 2005, 266,917, and 293,027 shares issued and outstanding, excluding 7,605, and 3,303 shares subject to repurchase (see Note 10) at December 31, 2004 and December 31, 2005
267
293
Additional paid-in capital
2,582,352
7,477,792
Deferred stock-based compensation
(249,470
)
(119,015
)
Accumulated other comprehensive income
5,436
4,019
Retained earnings
590,471
2,055,868
Total stockholders’ equity
2,929,056
9,418,957
Total liabilities and stockholders’ equity
$
3,313,351
$
10,271,813
Explanation / Answer
Google expect to collect from its customers in the future because of sales that were made prior to January 1st, 2006 = $687976 + 14852 = $702828
Google had written off $2,500 (thousand) of its accounts receivable as permanently uncollectible during the year ended December 31st, 2005, Bad debts during 2005 = (Written off + Allowance CB) – Allowance OB = (2500 + 14852) – 3962 = Bad Debts $13390
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