Question

The 2016 financial statements of Leggett & Platt include the accounts receivable footnote: Total accounts and other receivables at December 31 consisted of the following: (in millions) 2016 2015 Total accounts and other receivables $493.8 $529.5 Allowance for doubtful accounts (7.2 ) (9.3 ) Total accounts and other receivables, net $486.6 $520.2 The balance sheet reports total assets of $2,984.1 million at December 31, 2016. The common-size amount for gross accounts and other receivables are: Select one: A. $486.6 million B. $493.8 million C. 16.5% D. 5.0% E. None of the above

Answer 1

Answer:

The correct answer here would be option C) 16.5%.

Explanation:

For taking out the common size amount for gross accounts , formula is -

Gross account receivables  /   Total assets

Gross account receivables = net account receivables - allowance for doubt

                                                                                         full debts

= $486.6 + $7.2

= $493.8

Given -

Gross account receivables  = $493.8

Total assets  = $2984.1

Putting these values in the formula -

$493.8 / $2984.1

= 16.5%