Acc 2101

1269 Words Apr 23rd, 2013 6 Pages
• Case AP6-2: American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. AP6-2 Financial information for American Eagle is presented in Appendix A at the end of the book. Required: 1. In the summary of significant accounting policies, what is American Eagle's procedure in accounting for inventory? pA-12

AE evaluates merchandise inventory at the lower of average cost or market, utilizing retail method. Average cost includes merchandise design and sourcing costs and related expenses. AE records merchandise receipts at the time merchandise is delivered to the foreign shipping port by the manufacturer; at this point the title and risk of loss is transferred to the company.

2. For the most recent year, what is the
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Gross profit ratio:
GPR 2008 = 1,423,138/3,055,419 = 0,466
GPR 2009=1,174,101/2,988,866 = 0,393
GPR 2010=1,158,049/2,990,520 = 0,387

Gross profit ratio had been declining through the period of 2008-2010, which indicates decrease of markup that the company achieved on its inventory, which also means that it lowered sales prices compared to costs.

7. For the most recent year, calculate American Eagle's ratio of operating expenses to net sales.

Ratio of OE to NS is = (756,256+17,992+145,408)/2,990,520=0,3075

• Case AP6-3: The Buckle, Inc.
The Buckle, Inc. AP6-3 Financial information for The Buckle is presented in Appendix B at the end of the book. Required: 1. In the summary of significant accounting policies, what is The Buckle's procedure in accounting for inventory?

Cost of inventory is determined using the average method; inventory is stated at the lower of cost or market. +pB13

2. For the most recent year, what is the amount of inventory in the balance sheet? What does this amount represent? Inventory as of Jan 30, 2010 is $88,187.
This amount represents cost of items as of Jan 30,2010 which the company intends for sale to customers but have not yet sold.

3. The Buckle refers to its cost of goods sold using a different name. What is it?

Cost of sales (including buying, distribution, and occupancy costs) 4. For the most recent year, what is the amount of cost of goods sold in the

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