The following information has been adapted from the annual financial statements of General Mills, Inc.

1. What are the total amounts of accounts receivable for the two years given before considering the possible uncollectible accounts? That is, what are gross accounts receivable?
2. Do you think the company has a significant amount of bad debts? Why or why not?
3. Shortly after the financial statements were released, the company was notified that a major customer, who owes the company over a million dollars, had filed for bankruptcy. If the company had received that information before the financial statements were released, and recorded it, how would it have changed the financial statements for the period? Explain.
4. Calculate the accounts receivable turnover ratio for 2008 and 2007. (Net accounts receivable at the end of fiscal 2006 was $912 million.) Also, calculate the number of days it takes, on average, to collect an account receivable. Explain this information to the company€™smanagement.

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From the Balance Sheet May 25, 2008, and May 27, 2007 (in millions) May 25, 2008 May 27, 2007 ASSETS Current Assets Cash and cash equivalents Trade accounts receivable, less allowance of $16.4 and $16.4 661 417.1 in 2008 and 2007, respectively Inventories 1,081.6 1,366.8 952.9 1,173.4 Prepaid expenses, deferred income taxes and other current assets Total Current Assets Property, plant, and equipment, net Goodwill and intangible assets, net Other assets 510.3 3,053.7 3,013.9 6,835.4 5,280.7 $19,041.6 18,183.7 $510.6 3,620.0 3,108.1 6,786.1 5,527.4 Total Assets From the Income Statement: Fiscal years ended May 25, 2008, and May 27, 2007 (dollars in millions) Net revenues (sales) Cost of sales Gross profit 2008 2007 $13,652.1 $12,441.5 7,955.1 S 4,873.8 4,486.4 8,778.3