Question #5 Industry ratios for the same industry as Fleur Designs Ltd. for 2018 were reported as follows: Industry Data Average collection period 45 days Receivables turnover 8 times On their financial statements for 2017 and 2018, Fleur Designs reported the following: 2017 2018 Accounts Receivable $1,075,000 $1,118,000 Allowance for Doubtful Accounts $114,000 $125,000 Sales $5,814,000 $6,350,000 Sales Discounts $45,000 $42,000 Sales Returns $278,500 $397,500 Fleur Designs generally offers credit terms of 2/30, n/45. Based on the above information, identify all the following statements that are correct. (Ratios are rounded to the nearest whole number and each item should be considered independently) (a) Fleur Designs collects their receivables slower than industry. (b) Fleur Design's average gross accounts receivable for 2018 is $1,096,500 (c) Fleur Designs average collection period is acceptable given the credit terms they offer to customers. (d) Fleur Designs collects their receivables approximately 28 days slower than industry (e) if Fleur Designs Ltd. failed to write-off the account one of its customers who owed it $10,000, the carrying amount of the company's receivables would be overstated. (1) If Fleur Designs Ltd. failed to write-off the account one of its customers who owed it $60,000, the company's receivables turnover would be lower (9) As Fleur Designs Ltd's receivable turnover is lower than the industry average, we know that the company is collecting its accounts receivable more quickly than its competitors. The ratios for Fleur Designs Ltd. are shown below: Accounts Receivable Allowance for Doubtful Accounts Carrying Amount Sales Sales Discounts Sales Returns Net Sales 2017 2018 $1,075,000 $1,118,000 114,000 125,000 961,000 993,000 5,814,000 6,350,000 45,000 42,000 278,500 397,500 5,490,500 5,910,500 2018 Industry Difference Receivables Turnover ($5,910,500/$1,096,500) Average collection period (365/5) 73 45 28