Concept explainers
BURT’S BEES, Durham, North Carolina
Burt’s Bees describes itself as an “Earth-Friendly, Natural Personal Care Company” that produces products for health, beauty, and personal hygiene. The company manufactures over 150 products distributed in nearly 30,000 retail outlets worldwide. As a merchandising company, Burt’s Bees follows its inventory closely. This requires monitoring the receipt, production, purchasing, and planning of inventory. At the end of each time period, Burt’s Bees must make
- 1. What type of inventory system do you think Burt’s Bees uses? Why?
- 2. Using the inventory system you selected in no. 1, what is an example of the type of
journal entry Burt’s Bees would make when purchasing merchandise on account? - 3. Using the inventory system you selected in no. 1, what journal entry would Burt’s Bees use to record the sale of merchandise on account?
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Chapter 11 Solutions
College Accounting (Book Only): A Career Approach
- Boston Retail Company Boston Retail Company (clothing chain) is working with several suppliers of new and second-hand clothes. Store managers have the freedom to decide which supplier(s) they wants to work with and the amount and types of clothes they want to order for their stores in each season. The prices charged by each supplier are based on the price per piece of cloth and the total number of clothes ordered. A store manager first places the order with a supplier. After receiving and accepting the order, the supplier bills the store and the store pays the supplier to have the order delivered. A quality and quantity test is performed when receiving the order. After the test, the employees store and display the clothes in their store. When the clothes have been stored, staff needs to handle (e.g., check, iron, fold) each piece of the clothes so that they are in good shape and conditions. At the end of every season, the store needs to get rid of the clothes that are out of season…arrow_forwardKim Distribution Services (KDS) distributes food purchased in bulk to small retailers. The firm is divided into two divisions: Purchasing and Distribution. Purchasing is responsible for ordering goods from the manufacturer, receiving them, and then moving them to the appropriate location in the warehouse. Distribution is responsible for taking orders from retailers, picking the products from the warehouse for the orders, and packaging the orders for shipment. KDS has a policy of filling every order on the day of the order. If the firm is out of a particular item, it will ship a partial order and complete the order when the item is back in stock. Occasionally, an order will not have to be packaged if the retailer chooses to take delivery at the KDS loading dock. Distribution has 15 employees who are responsible for the activities, and all 15 are trained to handle any of the three tasks. Each of these employees works 40 hours per week for 50 weeks. There is an allowance of 15 percent…arrow_forwardKim Distribution Services (KDS) distributes food purchased in bulk to small retailers. The firm is divided into two divisions: Purchasing and Distribution. Purchasing is responsible for ordering goods from the manufacturer, receiving them, and then moving them to the appropriate location in the warehouse. Distribution is responsible for taking orders from retailers, picking the products from the warehouse for the orders, and packaging the orders for shipment. KDS has a policy of filling every order on the day of the order. If the firm is out of a particular item, it will ship a partial order and complete the order when the item is back in stock. Occasionally, an order will not have to be packaged if the retailer chooses to take delivery at the KDS loading dock. Distribution has 15 employees who are responsible for the activities, and all 15 are trained to handle any of the three tasks. Each of these employees works 40 hours per week for 50 weeks. There is an allowance of 15 percent…arrow_forward
- ABC, wholesale, customer protability. Veritek Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Veritek commented, “We apply ABC to determine product-line protability. The same ideas apply to customer protability, and we should nd out our customer protability as well.” Veritek Wholesalers sends catalogs to corporate purchasing departments on a monthly basis. The customers are entitled to return unsold merchandise within a six-month period from the purchase date and receive a full purchase price refund. The following data were collected from last year’s operations:arrow_forwardMeadow Logistics, Incorporated (MLI) distributes food purchased in bulk to small retailers. The firm is divided into two divisions: Purchasing and Distribution. Purchasing is responsible for ordering goods from the manufacturer, receiving them, and then moving them to the appropriate location in the warehouse. Distribution is responsible for taking orders from retailers, picking the products from the warehouse for the orders, and packaging the orders for shipment. MLI has a policy of filling every order on the day of the order. If the firm is out of a particular item, it will ship a partial order and complete the order when the item is back in stock. Occasionally, an order will not have to be packaged if the retailer chooses to take delivery at the MLI loading dock. Distribution has 20 employees who are responsible for the activities, and all 20 are trained to handle any of the three tasks. Each of these employees works 40 hours per week for 50 weeks. There is an allowance of 18…arrow_forwardData Table Annual demand for denim cloth 40,700 yards Ordering cost per purchase order $185 Carrying cost per year 10% of purchase costs Safety-stock requirements None Cost of denim cloth $11 per yard The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week). Print Donearrow_forward
- The Cloth Bonanza sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Cloth Banaza has collected the following information: Annual demand for denim cloth 29,250 yards Ordering cost per purchase order $195 Carrying cost per year 20% of purchase costs Safety-stock requirements None Cost of denim cloth $15 per yard The purchasing lead time is 2 weeks. The Cloth Banaza is open 250 days a year (50 weeks for 5 days a week). 1. Calculate the EOQ for denim cloth.…arrow_forwardThe Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Fabric World has collected the following information: Annual demand for denim cloth 40,700 yards Ordering cost per purchase order $185 Carrying cost per year 10% of purchase costs Safety-stock requirements = None Cost of denim cloth $11 per yard The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week). Q. Calculate the EOQ for denim cloth.arrow_forwardThe Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Fabric World has collected the following information: Annual demand for denim cloth 40,700 yards Ordering cost per purchase order $185 Carrying cost per year 10% of purchase costs Safety-stock requirements = None Cost of denim cloth $11 per yard The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week). Q. Calculate the number of orders that will be placed each year.arrow_forward
- Required information [The following information applies to the questions displayed below.] Ellery Products manufactures various components for the fashion industry. Ellery buys fabric from two vendors: Ewers Textiles and Bramford Materials. Ellery chooses the vendor based on price. Once the fabric is received, it is inspected to ensure that it is suitable for manufacturing purposes. Ellery disposes of fabric that is deemed unsuitable. The controller at Ellery collected the following information on purchases for the past quarter: Bid Total purchases (yards) Fabric discarded (yards) Ewers 21,200 1,060 Bramford 38,300 4,596 The purchasing manager has just received bids on an order for 800 yards of fabric from both Ewers and Bramford. Ewers bid $2,527 and Bramford bid $2,442. Assume that the average quality, measured by the amounts discarded from the two companies, will continue as in the past. Required: a. What bid by Ewers would make Ellery indifferent between buying from Ewer or…arrow_forwardThe Brenly Paint Company, your client, manufactures paint. The company’s president, Mr. Brenly, decided toopen a retail store to sell paint as well as wallpaper and other items that would be purchased from other suppliers.He has asked you for information about the retail method of estimating inventories at the retail store.Required:Prepare a report to the president explaining the retail method of estimating inventories.arrow_forwardMartin Shoes, Inc. manufactures and distributes orthopedic footwear. To sell its products, the marketing department requires sales personnel to call on the shoe retailers within their assigned geographic territories. Each salesperson has a laptop computer, which he or she uses to record sales orders during the day and to send these sales orders to Martin’s network nightly for updating the company’s sales order file. Each day, warehouse personnel review the current sales orders in its file, and where possible, pick the goods and ready them for shipment. (Martin ships goods via common carrier, and shipping terms are generally FOB from the shipping point.) When the shipping department completes a shipment, it also notifies the billing department, which then prepares an invoice for the customer. Payment terms vary by customer, but most are net 30. When the billing department receives a payment, the billing clerk credits the customer’s account and records the cash received. Requirements 1.…arrow_forward
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