6th Edition

ISBN: 9781307515565

Author: LANEN

Publisher: MCG/CREATE

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Textbook Question

Chapter 4, Problem 66P

Power Music owns five music stores, where it sells music, instruments, and supplies. In addition, it rents instruments. At the end of last year, the new accounts showed that although the business as a whole was profitable, the Fifth Avenue store had shown a substantial loss. The income statement for the Fifth Avenue store for last month follows:

Chapter 4, Problem 66P, Power Music owns five music stores, where it sells music, instruments, and supplies. In addition, it

Analysis of these results has led management to consider closing the Fifth Avenue store. Members of the management team agree that keeping the Fifth Avenue store open is not essential to maintaining good customer relations and supporting the rest of the company’s business. In other words, eliminating the Fifth Avenue store is not expected to affect the amount of business done by the other stores.

Required

What action do you recommend to Power Music’s management? Write a short report to management recommending whether or not to close the Fifth Avenue store. Include the reasons for your recommendation.

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Chapter 4, Problem 65P

Chapter 4, Problem 67P

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Chapter 4 Solutions

FUND.OF COST ACCT >CUSTOM<

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Solution Summary: The author recommends a short report to management recommending whether or not to close the Fifth Avenue store.

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