Explain the purpose of each adjusting entry.

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Answer 1

Question

Chapter 3, Problem 20AE

1.

To determine

Explain the purpose of each adjusting entry.

2.

To determine

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.

3.

To determine

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 3, Problem 20AE

1.

To determine

Explain the purpose of each adjusting entry.

2.

To determine

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.

3.

To determine

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

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Answer 3

Question

Chapter 3, Problem 20AE

1.

To determine

Explain the purpose of each adjusting entry.

2.

To determine

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.

3.

To determine

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 3, Problem 20AE

1.

To determine

Explain the purpose of each adjusting entry.

2.

To determine

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.

3.

To determine

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 20AE

1.

To determine

Explain the purpose of each adjusting entry.

2.

To determine

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.

3.

To determine

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

Answer 6

Chapter 3, Problem 20AE

1.

To determine

Explain the purpose of each adjusting entry.

Answer 7

Chapter 3, Problem 20AE

1.

To determine

Explain the purpose of each adjusting entry.

Answer 8

2.

To determine

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.

Answer 9

2.

To determine

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.

Answer 10

3.

To determine

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

Answer 11

3.

To determine

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 3 - If XYZ Consulting performs a consulting service,...Ch. 3 - Prob. 2DQ Ch. 3 - Prob. 3DQ Ch. 3 - Prob. 4DQ Ch. 3 - Prob. 5DQ Ch. 3 - Prob. 6DQ Ch. 3 - Prob. 7DQ Ch. 3 - Prob. 8DQ Ch. 3 - What kind of account is accumulated depreciation?...Ch. 3 - Prob. 10DQ

Explain the purpose of each adjusting entry.

Solution Summary: The author explains the purpose of each adjusting entry: to adjust the revenue, and the expenses during the period in which they occur.

Concept explainers

Videos

Explain the purpose of each adjusting entry.

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

Want to see the full answer?

Chapter 3 Solutions

Explain the purpose of each adjusting entry.

Solution Summary: The author explains the purpose of each adjusting entry: to adjust the revenue, and the expenses during the period in which they occur.

Concept explainers

Videos

Explain the purpose of each adjusting entry.

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31st May 2018.

Identify whether the operations of the May month is successful or not and explain the reason for the answer.

Want to see the full answer?

Chapter 3 Solutions

Calculate the ending balances of the accounts and prepare the income statement of Incorporation SS for the month ended 31^st May 2018.