• Case AP6-2: American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. AP6-2 Financial information for American Eagle is presented in Appendix A at the end of the book. Required: 1. In the summary of significant accounting policies, what is American Eagle's procedure in accounting for inventory? pA-12
AE evaluates merchandise inventory at the lower of average cost or market, utilizing retail method. Average cost includes merchandise design and sourcing costs and related expenses. AE records merchandise receipts at the time merchandise is delivered to the foreign shipping port by the manufacturer; at this point the title and risk of loss is transferred to the company.
2. For the most recent year, what is the
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Gross profit ratio:
GPR 2008 = 1,423,138/3,055,419 = 0,466
GPR 2009=1,174,101/2,988,866 = 0,393
GPR 2010=1,158,049/2,990,520 = 0,387
Gross profit ratio had been declining through the period of 2008-2010, which indicates decrease of markup that the company achieved on its inventory, which also means that it lowered sales prices compared to costs.
7. For the most recent year, calculate American Eagle's ratio of operating expenses to net sales.
Ratio of OE to NS is = (756,256+17,992+145,408)/2,990,520=0,3075
• Case AP6-3: The Buckle, Inc.
The Buckle, Inc. AP6-3 Financial information for The Buckle is presented in Appendix B at the end of the book. Required: 1. In the summary of significant accounting policies, what is The Buckle's procedure in accounting for inventory?
Cost of inventory is determined using the average method; inventory is stated at the lower of cost or market. +pB13
2. For the most recent year, what is the amount of inventory in the balance sheet? What does this amount represent? Inventory as of Jan 30, 2010 is $88,187.
This amount represents cost of items as of Jan 30,2010 which the company intends for sale to customers but have not yet sold.
3. The Buckle refers to its cost of goods sold using a different name. What is it?
Cost of sales (including buying, distribution, and occupancy costs) 4. For the most recent year, what is the amount of cost of goods sold in the
• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or
In accordance to the annual report of Woolworths Limited 2016, the current accounting practice that is applied to the business regarding its inventory disclosure includes; a perpetual inventory system which continually updates the information by increasing or decreasing inventory from reports throughout the year to verify accounting records (Bragg 2016). A perpetual inventory system in comparison to a periodic inventory system is more efficient and effective for larger corporations. With entities like Woolworths, many transactions occur between themselves and other stakeholders, so by utilising a perpetual inventory system, it saves time and also money (Woolworths 2016)
Retail Segment Retail Segment Results (millions) Sales Cost of sales Gross margin SG&A expenses (a) EBITDA
Inventory Method: The inventory amount for the year ended 12/31/2016 is $14,760,000,000 which is an $759,000,000 increase from the previous year. CVS uses the lesser of the weighted average cost or market value when determining the value of inventory. Inventory is verified for accuracy by regularly doing physical counts in all locations. Between physical counts, CVS uses sales results from previous years to accrue the estimated physical loss. These estimates are determined for each individual store and warehouse separately to ensure the most accurate information possible is reported. CVS has decided to use a new method available after annual periods beginning after 12/15/2016 known as the lower of cost and net realizable value to replace using
Review of ABC Company and the directions it is targeting. The strategy of the company is to lift the expected sales in an aggressive fashion, with the expected end target being to triple the current levels. The plan is to push sales into the targeted range of $3 million within 3 years versus the current amount which sits at $1.2 million. We will identify the perceived risk factors that may impact this aggressive strategy and its successful execution. The following will be those risk factors:
The process requires Peyton Approved to discover how much inventory is sold and what the cost of goods will result in. The process requires the business to review three forms of merchandise inventory to determine which summary benefits the business’s operational behavior. One will discover when assuming that first inventory purchased by the store is the first to be sold, it is determined that the FIFO method displays the best financial outcome for the business. During the process of updating journal entries, one must enter the information proved appropriately into the T-accounts to add the balance under each record. Once the T-accounts for transactions and adjusted transactions are balanced, the next step is to enter the information provided on the balance sheet. The balance sheet will list Peyton Approved assets, liabilities and stockholders equity after added during the T-account process (Nobles, 2014). Once the balance sheet is completed the income statement, statement of retained earnings, and closing entries can be filled with the information proved. This will give the business a full review from journal entry to closing entries of the business for the six month accounting
inventory using the cost method and did not change the method used during the current
330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.
In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.
2.2 Inventories (AASB 1019) as a general principle, inventories are valued at the lower of cost (including fixed and variable factory overheads where applicable) and net realizable value. Cost is determined on the basis of first-in-first-out, average or standard, whichever is the most appropriate in each case.
Total annual purchases were approximately $250, and about $60 million to be sourced through Materials Department
Note 3 touches on the category of cash and cash equivalents. Some of the cash equivalents are "available for sale securities." These include agency obligations ($20 million), commercial paper ($87 million), corporate debt securities ($78 million), government treasury securities ($606 million) and certificates of deposit ($64 million). In addition, the balance sheet shows $1.1886 billion in cash. There are stated at fair market value, which if it cannot be determined on the open market is estimated. The company values auction rate securities using an internally-developed valuation model. The company also notes that some of the "available for sale" securities are longer-term in
| The following inventory information above was taken from the records of BlobeKom Ltd.:Historical Cost $12,000Replacement Cost $ 9,000Expected selling price $10,000Expected selling cost $ 500Normal profit margin 10% of selling priceUnder U.S. GAPP, what should the Balance Sheet report for Inventory?Answer
(FIFO) policy, minimum stock reorder for each item and periodic stock evaluation. One of the