COMPARATIVE ANALYSIS: ABERCROMBIE & FITCH vs.

AEROPOSTALE Refer to the financial statements of Abercrombie & Fitch and Aeropostale that are supplied with this text.

Required:

Answer the following questions:

. Determine the amounts in the accounting equation for the year ending February 3, 2007 for each company. Does the accounting equation balance?

. Set up a T-account for Abercrombie & Fitch’s accounts receivable account and include the beginning and ending balances. Complete the T-account to reflect the sales and cash collections for the year. Assume all sales are on account.

. Provide the journal entry to record the following two events and post the amount to the T-account. For simplicity, assume the event was recorded in a single journal entry.

a. What journal entry is necessary to record Abercrombie & Fitch’s net sales for the year ending February 3, 2007? Assume that all sales were made on account.

b. What journal entry is necessary to record Abercrombie & Fitch’s cash collections from customers during the year ending February 3, 2007?

. Where does Abercrombie & Fitch and Aeropostale report credit card receivables?

(Hint: You may want to refer to the Summary of Significant Accounting Policies in the Notes to the Financial Statements.)

Provide the journal entry to record the amount of selling, general, and administrative expenses incurred during the year ending February 3, 2007 (fiscal 2006).

Assume all expenses incurred during the year were paid during the year. Why are Aeropostale’s selling, general, and administrative expenses smaller than Abercrombie & Fitch’s selling, general, and administrative expenses?

Case