Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company. To Prepare: The journal entries and T – accounts.

Question

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 1

Question

Chapter 4, Problem 4.33AP

1

To determine

Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.

To Prepare: The journal entries and T – accounts.

2

To determine

To Prepare: An unadjusted trial balance.

4

To determine

To Prepare: The adjusting entries.

5

To determine

To Prepare: An adjusted trial balance.

3

To determine

To Complete: The worksheet for the month ended December 31.

6

To determine

To Prepare: An income statement.

7

To determine

To Prepare: The closing entries for W Quality Automotive.

5

To determine

To Prepare: T-accounts and post the closing entries to the T-accounts

8

To determine

To Prepare: The post-closing trial balance at December 31, 2018.

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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 assets, Liabilities, and Equity?

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Answer 2

Question

Chapter 4, Problem 4.33AP

1

To determine

Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.

To Prepare: The journal entries and T – accounts.

2

To determine

To Prepare: An unadjusted trial balance.

4

To determine

To Prepare: The adjusting entries.

5

To determine

To Prepare: An adjusted trial balance.

3

To determine

To Complete: The worksheet for the month ended December 31.

6

To determine

To Prepare: An income statement.

7

To determine

To Prepare: The closing entries for W Quality Automotive.

5

To determine

To Prepare: T-accounts and post the closing entries to the T-accounts

8

To determine

To Prepare: The post-closing trial balance at December 31, 2018.

Expert Solution & Answer

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Answer 3

Question

Chapter 4, Problem 4.33AP

1

To determine

Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.

To Prepare: The journal entries and T – accounts.

2

To determine

To Prepare: An unadjusted trial balance.

4

To determine

To Prepare: The adjusting entries.

5

To determine

To Prepare: An adjusted trial balance.

3

To determine

To Complete: The worksheet for the month ended December 31.

6

To determine

To Prepare: An income statement.

7

To determine

To Prepare: The closing entries for W Quality Automotive.

5

To determine

To Prepare: T-accounts and post the closing entries to the T-accounts

8

To determine

To Prepare: The post-closing trial balance at December 31, 2018.

Expert Solution & Answer

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Answer 4

Question

Chapter 4, Problem 4.33AP

1

To determine

Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.

To Prepare: The journal entries and T – accounts.

2

To determine

To Prepare: An unadjusted trial balance.

4

To determine

To Prepare: The adjusting entries.

5

To determine

To Prepare: An adjusted trial balance.

3

To determine

To Complete: The worksheet for the month ended December 31.

6

To determine

To Prepare: An income statement.

7

To determine

To Prepare: The closing entries for W Quality Automotive.

5

To determine

To Prepare: T-accounts and post the closing entries to the T-accounts

8

To determine

To Prepare: The post-closing trial balance at December 31, 2018.

Expert Solution & Answer

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Answer 5

Chapter 4, Problem 4.33AP

1

To determine

Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.

To Prepare: The journal entries and T – accounts.

2

To determine

To Prepare: An unadjusted trial balance.

4

To determine

To Prepare: The adjusting entries.

5

To determine

To Prepare: An adjusted trial balance.

3

To determine

To Complete: The worksheet for the month ended December 31.

6

To determine

To Prepare: An income statement.

7

To determine

To Prepare: The closing entries for W Quality Automotive.

5

To determine

To Prepare: T-accounts and post the closing entries to the T-accounts

8

To determine

To Prepare: The post-closing trial balance at December 31, 2018.

Answer 6

Chapter 4, Problem 4.33AP

1

To determine

Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.

To Prepare: The journal entries and T – accounts.

Answer 7

Chapter 4, Problem 4.33AP

1

To determine

Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.

To Prepare: The journal entries and T – accounts.

Answer 8

2

To determine

To Prepare: An unadjusted trial balance.

Answer 9

2

To determine

To Prepare: An unadjusted trial balance.

Answer 10

4

To determine

To Prepare: The adjusting entries.

Answer 11

4

To determine

To Prepare: The adjusting entries.

Answer 12

5

To determine

To Prepare: An adjusted trial balance.

Answer 13

5

To determine

To Prepare: An adjusted trial balance.

Answer 14

3

To determine

To Complete: The worksheet for the month ended December 31.

Answer 15

3

To determine

To Complete: The worksheet for the month ended December 31.

Answer 16

6

To determine

To Prepare: An income statement.

Answer 17

6

To determine

To Prepare: An income statement.

Answer 18

7

To determine

To Prepare: The closing entries for W Quality Automotive.

Answer 19

7

To determine

To Prepare: The closing entries for W Quality Automotive.

Answer 20

5

To determine

To Prepare: T-accounts and post the closing entries to the T-accounts

Answer 21

5

To determine

To Prepare: T-accounts and post the closing entries to the T-accounts

Answer 22

8

To determine

To Prepare: The post-closing trial balance at December 31, 2018.

Answer 23

8

To determine

To Prepare: The post-closing trial balance at December 31, 2018.

Answer 24

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Answer 25

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Answer 35

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To Prepare: An unadjusted trial balance.

To Prepare: The adjusting entries.

To Prepare: An adjusted trial balance.

To Complete: The worksheet for the month ended December 31.

To Prepare: An income statement.

To Prepare: The closing entries for W Quality Automotive.

To Prepare: T-accounts and post the closing entries to the T-accounts

To Prepare: The post-closing trial balance at December 31, 2018.

Chapter 4 Solutions