Case One

Case 1. Assume you be opening a drive in Bath & Beyond store. To finance the business, you need a $500,000 loan, and your banker requires a set of forecasted financial statements. Assume you are preparing the statements and must knead some decisions about how to do the ac reckoninging for the business. Answer the spare-time activity questions (refer back to Chapter 5 if necessary):

1. Which type of memorandum system get out you use? Give your reason.

I leave use the constant inventory system because it keeps a running record of inventory and cost of goods sold and achieves control over inventory.

2. Show how to write in code net purchases and net sales. How depart you treat the cost of transportation-in?

sales Revenue ?Sales Returns and Allowances ?Sales Discounts = Net Sales Revenue

memorandum Purchase Returns and Allowances Purchase Discounts + Freight in = Inventory (Net address of Inventory)

Since I will pay freight in, the cost of transportation-in will be added to the purchases of inventory.

3. How often do you plan to do a physical count of inventory on muckle? What will the physical count accomplish?

I plan to do a physical count of inventory on hand at least once a year.



The physical count should keep inventory current and allow any adjustments to be made based on count.

4. Inventory costs are rising. Which inventory costing method will you use in order to:

a. Maximize net income?

I will habituate FIFO. When prices are rising, that means that erstwhile(a) items cost less. FIFO assigns older items to COGS, making net income higher

b. Pay the least amount of income assess?

LIFO results in the highest cost of goods sold and the lowest coarse profit. That lets companies pay the lowest income taxes when inventory costs are rising. minuscule tax payments conserve cash and thats the main reach of LIFO.If you want to get a full essay, order it on our website: Orderessay



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