Foot Locker, Inc. - ending balance amount
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Need help figuring out these questions from my textbook. The information to solve these is attached in PDF files....I just can't figure them out.
1 Make a T-account for Short-term investments. Record $249 as the balance in the account as of the end of 2006. Using the information in the investments section of the Consolidated Statement of Cash Flows, record the cash purchases and sales of short-term investments during 2007. Why doesn't the ending balance equal the amount shown on the balance sheet as of the end of 2007?
2 Three important pieces of information are (a) the cost of inventory on hand, (b) the cost of sales, and (c) the cost of inventory purchases. Identify or compute each of these items for Foot Locker, Inc. at the end of its fiscal year 2007.
3 Assume that all inventory purchases were made on account, and that only inventory purchased increased Accounts Payable. Compute Foot Locker, Inc.s cash payments for inventory during fiscal 2007.
4 Did Foot Locker, Inc.s gross profit percentage and rate of inventory turnover improve or deteriorate in fiscal 2007 (versus fiscal 2006)? Consider the overall effect of these two ratios. Did Foot Locker, Inc. improve during fiscal 2007? How did these factors affect the net income for fiscal 2007? Foot Locker, Inc.s inventories totaled $1,254 million at the end of fiscal 2005. Round decimals to three places.
5 Were Foot Locker, Inc.s plant assets proportionately newer or older at the end of fiscal 2007 (versus 2006)? Explain your answer.
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Solution Summary
Your tutorial indicates how to respond to these questions and gives you an analysis in Excel (click in cells to see computations) of gross profit percent, inventory turnover, average days in inventory, and percent used up of plant assets. Ratios are interpreted.
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1 Make a T-account for Short-term investments. Record $249 as the balance in the account as of the end of 2006. Using the information in the investments section of the Consolidated Statement of Cash Flows, record the cash purchases and sales of short-term investments during 2007. Why doesn't the ending balance equal the amount shown on the balance sheet as of the end of 2007?
Here is the basic format (hard to do "T" in text screen):
.......................Short Term Investments
---------------------------------------------------------
--DEBIT----------------|-----CREDIT----------------
....Beg ST Invt
....Purchases
....................................|....Sales of investments
...= End ST Invt
Plug amounts (get purchases and sales from cash flow statement, investing section):
.......................Retained Earnings
--DEBIT----------------|-----CREDIT----------------
....249
....1,378
....................................|....1,620
...= 7 (doesn't match balance sheet which shows $5)
The ending ...
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