Excel Applications for Accounting Principles
4th Edition
ISBN: 9781111581565
Author: Gaylord N. Smith
Publisher: Cengage Learning
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Chapter C, Problem 2C
To determine
Determine and group the ratios for all the five years, by type. Compare ratios to industry standards, and draw a 3-D area chart.
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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.)
The following income statement was drawn from the records of Adams, a merchandising firm:
ADAMS COMPANY
Income Statement
For the Year Ended December 31
Sales revenue (5,500 units × $169)
$
929,500
Cost of goods sold (5,500 units × $83)
(456,500
)
Gross margin
473,000
Sales commissions (10% of sales)
(92,950
)
Administrative salaries expense
(81,000
)
Advertising expense
(38,000
)
Depreciation expense
(41,000
)
Shipping and handling expenses (5,500 units × $3)
(16,500
)
Net income
$
203,550
Required
Reconstruct the income statement using the contribution margin format.
Calculate the magnitude of operating leverage.
Use the measure of operating leverage to determine the amount of net income Adams will earn if sales increase by 20 percent.
1. Consider the following data determined from the financial statements of a major retailer:
Inventory turnover = 75 days
Days' sales outstanding = 30
Days' purchases outstanding = 50
Which of the following statements is correct?
A.All of these statements are correct.
B.On average, the company pays its suppliers 55 days before it collects cash from its customers.
C.On average, the company sells the inventory 45 days before it collects cash from its customers.
D.On average, the company collects cash from its customers 20 days before it pays its suppliers.
E.On average, the company purchases its inventory 25 days before it sells it.
2. Which of the following would explain why Payments to suppliers and employees for the period is greater than Total operating expenses for the period?
A.Significant impairments of non-current assets during the period.
B.Significant levels of prepaid expenses at the end of the period.
C.Significant levels of trade payables at the end of the period.…
Chapter C Solutions
Excel Applications for Accounting Principles
Knowledge Booster
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