FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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1. Assume that Urban One sells a $300 gift certificate to a customer, collecting the $300 cash in advance.
Prepare the journal entry for (a) collection of the cash for delivery of the gift certificate to the customer and
(b) revenue from the subsequent delivery of merchandise when the gift certificate is used.
2. How can keeping less inventory help to improve Urban One's profit margin?
3. Cathy Hughes understands that many companies carry considerable inventory, and she is thinking of
carrying additional inventory of merchandise for sale. Cathy desires your advice on the pros and cons of
carrying such inventory. Provide at least one reason for, and one reason against, carrying additional
inventory.
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