Connect Access Card for Financial Accounting
9th Edition
ISBN: 9781259738678
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 7, Problem 7.4ME
Inferring Purchases Using the Cost of Goods Sold Equation
JCPenny Company, Inc., is a major retailer with department stores in all 50 states. The dominant portion of the company’s business consists of providing merchandise and services to consumers through department stores that include catalog departments. In a recent annual report, JCPenney reported cost of goods sold of $11,042 million, ending inventory for the current year of $2,916 million, and ending inventory for the previous year of $3,213 million.
Required:
Is ii possible to develop a reasonable estimate of the merchandise purchases for the year? If so, prepare the estimate: if not, explain why.
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Inventory Turnover and days' sales in inventory
Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management
is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following
merchandise inventory (in millions) information:
Kracker
Foodstuff
Winston
Corp.
Inc.
Stores
Cost of merchandise sold
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Inventory, beginning of
1,951.3
2,131.8
1,582.1
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1,912.7
2,048.2
1,489.9
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day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory,
round final answers to the nearest day, and for inventory turnover, round to one decimal place.
Company names
Inventory Turnover
Days' Sales in Inventory
Kracker
days
Foodstuff
days
Winston Stores
days
c. The…
Inventory Turnover and days' sales in inventory
Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the
United States. Inventory management is an important aspect of the grocery retail
business. Recent balance sheets for these three companies indicated the following
merchandise inventory (in millions) information:
Kracker
Foodstuff
Winston
Corp.
Inc.
Stores
Cost of merchandise sold
$33,580.0 $34,675.0 $35,040.0
Inventory, beginning of
1,951.3
2,131.8
1,582.1
year
Inventory, end of year
1,912.7
2,048.2
1,489.9
a. & b. Determine the inventory turnover and the number of days' sales in inventory
(use 365 days and round to the nearest day) for the three companies. Round all
interim calculations to one decimal place. For days' sales in inventory, round
final answers to the nearest day, and for inventory turnover, round to one
decimal place.
Company names
Inventory Turnover
Days' Sales in Inventory
Kracker
17.38 X
21.00 v days
Foodstuff
16.59
X
22.00 v days…
Inventory Turnover and days' sales in inventory
Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance
sheets for these three companies indicated the following merchandise inventory (in millions) information:
Cost of merchandise sold
Inventory, beginning of year
Inventory, end of year
Kracker
Foodstuff
Kracker
Corp.
$33,580.0
1,951.3
1,912.7
Winston Stores
a. & b. Determine the inventory turnover and the number of days' sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to
one decimal place. For days' sales in inventory, round final ers to the nearest day, and for inventory turnover, round to one decimal place.
Company names
Inventory Turnover
TE
16.6
22.8 ✔
Foodstuff
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17.4
$33,215.0
2,042.0
1,962.0
Winston
Stores
$35,405.0
1,598.6
1,505.4
Days' Sales in Inventory
21 ✔ days…
Chapter 7 Solutions
Connect Access Card for 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...
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