P7-3 and CP7-2

profilehowework4343
mba6014_unit4_cp7_2.xlsx
Home>Business & Finance homework help>Accounting homework help>P7-3 and CP7-2

CP7-2

CP7-2 Finding Financial Information LO7-2, 7-4, 7-5, 7-7
Refer to the financial statements of Urban Outfitters given in Appendix C at the end of this book.
Required:
1. The company uses lower of cost or market to account for its inventory. At the end of the year, do you expect the company to write its
inventory down to replacement cost or net realizable value? Explain your answer.
2. What method does the company use to determine the cost of its inventory?
Where did you find this information?
3. If the company overstated ending inventory by $10 million for the year ended January 31, 2012, what would be
the corrected value for Income before Income Taxes?
4. Compute the inventory turnover ratio for the current year.
Fiscal Year Ended Cost of Goods Sold / Average Inventory = Inventory Turnover
1/31/12
What does an inventory turnover ratio tell you?

CP7-2 Check Figures

CP7-2 Finding Financial Information LO7-2, 7-4, 7-5, 7-7
Refer to the financial statements of Urban Outfitters given in Appendix C at the end of this book.
Required:
1. The company uses lower of cost or market to account for its inventory. At the end of the year, do you expect the company to write its
inventory down to replacement cost or net realizable value? Explain your answer.
2. What method does the company use to determine the cost of its inventory?
Where did you find this information?
3. If the company overstated ending inventory by $10 million for the year ended January 31, 2012, what would be
the corrected value for Income before Income Taxes?
If the company had overstated its ending inventory by $10 million, its income before income taxes would be overstated by $10 million.
4. Compute the inventory turnover ratio for the current year.
Fiscal Year Ended Cost of Goods Sold / Average Inventory = Inventory Turnover
1/31/12
What does an inventory turnover ratio tell you?

Sheet2

List 1
Specific identification
First-in, first-out
Last-in, first-out
Average cost