Financial Accounting
9th Edition
ISBN: 9781259738692
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 7, Problem 7.4E
Inferring Merchandise Purchases
Abercrombie and Fitch is a leading retailer of casual apparel for men, women, and children. Assume that you are employed as a stock analyst and your boss has just completed a review of the new Abercrombie annual report. She provided you with her notes, but they are missing some information that you need. Her notes show that the ending inventory for Abercrombie in the current and previous years was $560,818,000 and $385,857,000. respectively. Net sales for the current year were $4,158,058,000. Cost of goods sold was $1,639,188,000. Net income was $127,658,000. For your analysis, you determine that you need to know the amount of purchases for the year.
Required:
Can you develop the information from her notes? Explain and show calculations. (Hint: Use the cost of goods sold equation or the inventory T-account to solve for the Deeded value.)
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Determine the cost of goods sold and determine the cost of purchase for the first quarter
Abercrombie and Fitch is a leading retailer of casual apparel for men, women, and children. Assume that you are employed as a stock analyst and your boss has just completed a review of the new Abercrombie annual report. She provided you with her notes, but they are missing some information that you need. Her notes show that the ending inventory for Abercrombie in the current and previous years was $424,393,000 and $399,795,000, respectively. Net sales for the current year were $3,492,690,000. Cost of goods sold was $1,408,848,000. Income before taxes was $55,161,000.
Required:
Determine the amount of purchases for the year. (Hint: Use the cost of goods sold equation or the inventory T-account to solve for the needed value.)
Harrison and Company is a leading retailer of casual apparel for men, women, and
children. Assume that you are employed as a stock analyst and your boss has just
completed a review of the new Harrison annual report. She provided you with her
notes, but they are missing some information that you need. Her notes show that
the ending inventory for Harrison in the current and previous years was
$272,472,000 and $233,103,000, respectively. Net sales for the current year were
$2,540,266,000. Cost of goods sold was $178,524,000. Income before taxes was
$172,335,000.
Required:
Determine the amount of purchases for the year. (Hint: Use the cost of goods sold
equation or the inventory T-account to solve for the needed value.)
Amount of purchases
Chapter 7 Solutions
Financial Accounting
Ch. 7 - Why is inventory an important item to both...Ch. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - The chapter discussed tour inventory costing...Ch. 7 - Prob. 7QCh. 7 - Contrast the effects of LIFO versus FIFO on...Ch. 7 - Contrast the income statement effect of LIFO...Ch. 7 - Prob. 10Q
Ch. 7 - Explain briefly the application of the LCM concept...Ch. 7 - Prob. 12QCh. 7 - Consider the following information: ending...Ch. 7 - The inventory costing method selected by a company...Ch. 7 - Which of the following is not a component of the...Ch. 7 - Consider the following information: beginning...Ch. 7 - Consider the following information: beginning...Ch. 7 - An increasing inventory turnover ratio a....Ch. 7 - If the ending balance in accounts payable...Ch. 7 - Which of the following regarding the lower of cost...Ch. 7 - Which inventory method provides a better matching...Ch. 7 - Which of the following is false regarding a...Ch. 7 - Prob. 7.1MECh. 7 - Recording the Cost of Purchases for a Merchandiser...Ch. 7 - Identifying the Cost of Inventories for a...Ch. 7 - Inferring Purchases Using the Cost of Goods Sold...Ch. 7 - Prob. 7.5MECh. 7 - Matching Inventory Costing Method Choices to...Ch. 7 - Reporting Inventory under Lower of Cost or Market...Ch. 7 - Determining the Effects of Inventory Management...Ch. 7 - Prob. 7.9MECh. 7 - Prob. 7.1ECh. 7 - Inferring Missing Amounts Based on Income...Ch. 7 - Prob. 7.3ECh. 7 - Inferring Merchandise Purchases Abercrombie and...Ch. 7 - Calculating Ending Inventory and Cost of Goods...Ch. 7 - Calculating Ending Inventory and Cost of Goods...Ch. 7 - Analyzing and Interpreting the Financial Statement...Ch. 7 - Analyzing and Interpreting the Financial Statement...Ch. 7 - Evaluating the Choice among Three Alternative...Ch. 7 - Evaluating the Choice among Three Alternative...Ch. 7 - Prob. 7.11ECh. 7 - Reporting Inventory at Lower of Cost or Market...Ch. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - (Chapter Supplement A) Analyzing the Effects of a...Ch. 7 - (Chapter Supplement B) FIFO and LIFO Cost of Goods...Ch. 7 - (Chapter Supplement C) Recording Sales and...Ch. 7 - Analyzing Items to Be Included in Inventory Travis...Ch. 7 - Prob. 7.2PCh. 7 - Evaluating Four Alternative Inventory Methods...Ch. 7 - Prob. 7.4PCh. 7 - Evaluating the LIFO and FIFO Choice When Costs Are...Ch. 7 - Evaluating the Income Statement and Cash Flow...Ch. 7 - Evaluating the Effects of Manufacturing Changes on...Ch. 7 - Evaluating the Choice between LIFO and FIFO Based...Ch. 7 - Prob. 7.9PCh. 7 - (Chapter Supplement A) Analyzing LIFO and FIFO...Ch. 7 - Prob. 7.1APCh. 7 - Evaluating Four Alternative Inventory Methods...Ch. 7 - Evaluating the UFO and FIFO Choice When Costs Are...Ch. 7 - Prob. 7.4APCh. 7 - Prob. 7.1CONCh. 7 - Finding Financial Information Refer to the...Ch. 7 - Finding Financial Information Refer to the...Ch. 7 - Comparing Companies within an Industry Refer to...Ch. 7 - Prob. 7.4CPCh. 7 - Using Financial Reports: Interpreting Effects of...Ch. 7 - Making a Decision as a Financial Analyst: Analysis...Ch. 7 - Evaluating an Ethical Dilemma: Earnings, Inventory...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.arrow_forwardCompute for the net sales that would be reported in LIVA company's Income Statement. You are assigned to prepare the financial statements of LIVA Company for the year 2021. The following data were made available for you: Ending Inventory at Cost 739,160 3,930,000 16,000 Goods Available for Sale at retail Sales Discount Net markdowns 48,500 Net markups 30,000 1,450,000 2,422,000 Beginning inventory at retail Purchases at retail The company adopts the ayverage cost approach to estimate the value of its inventory and the cost ratio is computed at 68%.arrow_forwardI need help with this question problemarrow_forward
- Compute for the net sales that would be reported in LIVA company's Income Statement.arrow_forwardAccounting Compute for the net sales that would be reported in LIVA company's Income Statement. You are to be assigned to prepare the financial statement of LIVA Company for the year 2021. The following data were made available for you: Ending Inventory at Cost - 739, 160 Goods Available for Sale at retail - 3, 930, 000 Sales Discount - 16, 000 Net markdowns - 48, 500 Net markups - 30, 000 Beginning inventory at retail - 1, 450, 000 Purchases at retail - 2, 422, 000 The company adopts the average cost approach to estimate the value of its inventory and the cost ratio is computed at 68%.arrow_forwardAshvinnarrow_forward
- Journalize the following sales transactions for Lucy's Boutique. Explanations are not required. The company estimates sales returns at the end of each month. (Assume the company uses a perpetual inventory system and records sales at the net amount.) (Click the icon to view the transactions.) Mar. 3: Lucy sold $63,000 of women's clothes on account, credit terms are 3/10, n/30, to Maria's Dresses. Cost of goods is $35,000. Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale. We will do that in the following step. Date Accounts Debit Credit Mar, 3 More Info Now journalize the expense related to the March sale-Cost of goods, $35,000. Date Accounts Debit Credit Mar. 3 Lucy sold $63,000 of women's clothes on account, credit terms are 3/10, n/30, to Maria's Dresses. Cost of goods is $35,000. Mar. 3 Lucy granted a sales allowance of $100 for the clothes sold on March 3. Maria's Dresses did not return the inventory. Mar.…arrow_forwardDirection: The following list of accounts for Pazado, Inc is available at the end of December 2020. Make a summary of Income Statement from the given information below with the following required data. 1. Calculate the turnover/ROI 2. Calculate the consumption of goods for sale 3. Prepare the Income Statement of Pazado, Inc for year 2020. Sales Rent Expense Depreciation Expense Utilities Expense Taxes and Licenses Goods Available for Sale Merchandise, Inventory, January 31 Salaries Expense Freight, out Uncollectible Accounts Sales Discount Sales Returns and Allowance 902,000 30,000 11,250 18,000 15,000 714,900 102,000 50,000 3.920 19,100 5,000 13,000arrow_forwardTopic: SINGLE-ENTRY BOOKKEEPING BARUMBUM Company suspects that there is missing inventory in its warehouse at December 31, 2021. All sales and purchases were made on account. Also, the gross profit rate based on net sales is consistent every year. To aid in your investigation, you obtained the following: How much is the net purchases during the year?arrow_forward
- HACHING Company suspects that there is missing inventory in its warehouse at December 31, 2021. All sales and purchases were made on account. Also, the gross profit ratebased on net sales is consistent every year. To aid in your investigation, you obtained the following: How much is the net sales revenue for the year?arrow_forward8. Hampton Computers has the following transactions in August related to the sale of merchandise inventory. i (Click the icon to view the transactions.) Journalize the sales transactions for Hampton Computers assuming the company uses the perpetual inventory system. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Assume the company records sales at the net amount.) Aug. 12: Sold computers on account for $11,900 to a customer, terms 1/15, n/ 60. The cost of the computers is $7,140. Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale. We will do that in the following step. Date Accounts and Explanation Debit Credit Aug. 12 More Info August 12 Sold computers on account for $11,900 to a customer, terms 1/15, n/60. The cost of the computers is $7,140. 26 Received payment from the customer on balance due. Choose from any list or enter any number in the input…arrow_forwardTopic: SINGLE-ENTRY BOOKKEEPING HALSEY Company suspects that there is missing inventory in its warehouse at December 31, 2021. All sales and purchases were made on account. Also, the gross profit rate based on net sales is consistent every year. To aid in your investigation, you obtained the following: How much is the net sales revenue for the year?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License