1. The inventory turnover rates for Abercrombie & Fitch Co. (ANF) and TJX Companies (TJX) in 2015 are calculated as follows:

Which of the following statement is correct according to the information above?

1. TJX collects accounts receivable more quickly than ANF.
2. TJX sells inventory more quickly than ANF.
3. ANF sells inventory more quickly than TJX.
4. A lower inventory turnover rate is preferred so that ANF has the better inventory turnover ratio.

Your answer is _________________

2.

Part II Transaction Analysis (2 points 5 = 10 points)

Following are selected transactions of ABC Company. Record the effects of these transactions using the financial statement effects template.

1. Shareholders contributed $1,000,000 cash to the business in exchange for common stock.
2. The company obtained a bank loan of $50,000.
3. Purchased $5,000 equipment and paid cash.
4. Purchased inventory at the cost of $3,000 by paying $1,000 cash and receiving short-term credit from the remainder of the supplier.
5. The company recorded and paid salaries and wages of $4,500.

	Balance Sheet												Income Statement
	Cash Asset	+	Noncash Asset	=	Liabilities	+	Contributed Capital	+	Retained Earnings (Or Earned Capital)			Revenue		-	Expense	=	Net Income
1	1,000,000		0		0		1,000,000		0			0			0
2
3	(5,000)		5,000		0		0		0			0			0		0
4	(1,000)		3,000		2,000		0		0			0			0
5	(4,500)		0		0		0		0			0			4.500		(4,500)

Inventory turnover rate ANF = 3.18 TJX= 6.85 ANF = 114.78 days TJX = 53.28 days Days inventory outstanding 5. Estimating Uncollectible Accounts and Reporting Accounts Receivable LaFond Company analyzes its accounts receivable at December 31, and arrives at the aged categories below along with the percentages that are estimated as uncollectible, Accounts Estimated Age Group Receivable Loss 0-30 days past due $ 90,000 31-60 days past due 20,000 61-120 days post due 11,000 10 121-180 6,000 20 Over 180 days past due 4,000 50 Total accounts receivable $ 131,000 4 The balance of the allowance for uncollectible accounts is $1,040 on December 31, before my adjustments. (a) What amount of badl dubts expense will LaFond report in its income statement for the year? Please show your calculations. 11 ACCT -51 -URI Income Statement (b) Use the financial statement effects template to record LaFond's bad debis expense for the year. Balance Sheet Retained Earnings Cash Noncash Contributed (Or Earned Asset Asset Liabilities + Capital + Capital) Revenue Bad debt expens e Expense Ner Income