Chapter 6, Problem 6.3APFA

1.

To determine

Company B’s procedure in accounting for inventory.

2.

To determine

The amounts of inventory in the balance sheet for the most recent year and also describe the amount it represents.

3.

To determine

To explain: The manner in which the cost of goods sold is referred by Company B.

4.

To determine

The amounts of cost of goods sold in the income statement for the most recent year and also define the amount it represents.

5.

To determine

To calculate: The inventory turnover ratio and the average days in inventory for the most recent year of Company B.

6.

To determine

To calculate: The Gross profit ratio of Company B for each of the three years.

7.

To determine

To calculate: The B Company’s ratio of operating expenses to net sales.