J.C. Penney is one the major retailers in the United States. Access the company's 10-K for the

Question:

J.C. Penney is one the major retailers in the United States. Access the company's 10-K for the fiscal year ended January 31, 2009. You can find the 10-K at the company's website, www.jcpenney.com or by using EDGAR at www.sec.gov. Answer the following questions

Required:

1. What inventory methods does J.C. Penney use to value its inventory?

2. How does the company estimate the effects of changing prices on ending inventory?

3. How does J.C. Penney apply the lower-of-cost-or-market rule?

4. A company that uses LIFO is allowed to provide supplemental disclosures reporting the effect of using another inventory method rather than LIFO. Using J.C. Penney's supplemental LIFO disclosures, determine the income effect of using LIFO versus another method for the current fiscal year.

5. Calculate the company's inventory turnover ratio for the fiscal year ended January 31, 2009.

6. Assume that in the next fiscal year the company decides to switch to the average cost method. Describe the accounting treatment required for the switch.

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,... Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...