You are a recent College graduate and you are working in the accounting department of Macys. Next week, you are required to attend an inventory meeting for the store located in the Paramus Park mall. You know this store well because you shop there frequently. One of the managers of the store feels that the mens Shoe department is unprofitable because the selection is poor, there are few sizes available, and there just arent enough shoes. The manager is pushing for a very large shoe inventory to make the department more desirable to shoppers and therefore more profitable. (1) Explain why it is good or bad to have a large inventory of shoes.

(2) Do the terms LIFO, FIFO, and Weighted Average have anything to do with the actual physical flow of the items in inventory? Please explain.

(3) Which inventory valuation (LIFO, FIFO, or Weighted Average) do you feel presents financial statements that are fairly stated?