8-12 Integrating problem; inventories and accounts receivable; Chapters 7 and 8 [LO4, 6, 7] Inverness Steel Corporation is a producer of flat-rolled carbon, stainless and electrical steels, and tubular products. The company's income statement for the 2011 fiscal year reported the following information ($ in millions): Sales $ 6,255 Cost of goods sold 5,190 -------------------------------------------------------------------------------- The company's balance sheets for 2011 and 2010 included the following information ($ in millions): 2011 2010 Current assets: Accounts receivable, net $ 703 $ 583 Inventories 880 808 -------------------------------------------------------------------------------- The statement of cash flows reported bad debt expense for 2011 of $8 million. The summary of significant accounting policies included the following notes ($ in millions): Accounts Receivable (in part) The allowance for uncollectible accounts was $10 and $7 at December 31, 2011 and 2010, 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 $480 and $350 at the end of 2011 and 2010, respectively. During 2011, 2010, and 2009, liquidation of LIFO layers generated income of $6, $7, and $25, respectively. Required: (1) Determine the amount of accounts receivable Inverness wrote off during 2011. (Enter your answer in millions. Omit the "$" sign in your response.) Accounts receivable written off $ (2) Calculate the amount of cash collected from customers during 2011. (Enter your answer in millions. Omit the "$" sign in your response.) Cash collections $ (3) Calculate what cost of goods sold would have been for 2011 if the company had used average cost to value its entire inventory. (Enter your answer in millions. Omit the "$" sign in your response.) Cost of goods sold $ (4) Calculate the following ratios for 2011 (Round your turnover ratio values to 2 decimal places and profit ratio value to the nearest whole percent. Omit the "%" sign in your response): a. Receivables turnover ratio b. Inventory turnover ratio c. Gross profit ratio %