Question

Inverness Steel Corporation is a producer of flat-rolled carbon, stainless and electrical steels, and tubular products. The company's income statement for the 2016 fiscal year reported the following information ($ in millions):

Sales $ 6,100
Cost of goods sold 5,100
The company's balance sheets for 2016 and 2015 included the following information ($ in millions):

2016 2015
Current assets:
Accounts receivable, net $ 702 $ 602
Inventories 890 814
The statement of cash flows reported bad debt expense for 2016 of $6 million. The summary of significant accounting policies included the following notes ($ in millions):

Accounts Receivable (in part)
The allowance for uncollectible accounts was $8 and $5 at December 31, 2016 and 2015, respectively. All sales are on credit.

Inventories
Inventories are valued at the lower of cost or market. The cost of the majority of inventories is measured using the last in, first out (LIFO) method. Other inventories are measured principally at average cost and consist mostly of foreign inventories and certain raw materials. If the entire inventory had been valued on an average cost basis, inventory would have been higher by $460 and $310 at the end of 2016 and 2015, respectively.

During 2016, 2015, and 2014, liquidation of LIFO layers generated income of $4, $5, and $23, respectively.

Required:
1.
Determine the amount of accounts receivable Inverness wrote off during 2016. (Enter your answer in millions.)

2.
Calculate the amount of cash collected from customers during 2016. (Enter your answer in millions.)

3.
Calculate what cost of goods sold would have been for 2016 if the company had used average cost to val

4.
Calculate the following ratios for 2016. (Round "Receivables turnover ratio" and "Inventory turnover ratio" answers to 2 decimal places. Round "Gross profit ratio" answer to nearest percent (i.e., 0.123 needs to be entered as 12%).)

ue its entire inventory. (Enter your answer in millions.)

Answer 1

3million Usd, 5794million Usd, 4950million Usd, 16%

Step-by-step explanation:

1) Accounts receivable Inverness wrote off during 2016.

Accounts receivable write off

= balance of beginning of the year + bad debt expenses - balance at the end of the year.

Inputting the figures, we will have;

= $5million + $6million - $8million

= $3million.

Please kindly check attachment for step by step solution of the answers.