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Abercrombie & Fitch Co.

ABERCROMBIE & FITCH CO

Accounting Problem
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Instructions:

1. Go to Blackboard and download "ANF Worksheet." The first tab has pre-made T-Accounts that do not yet have titles. Name the T-accounts for each balance sheet and income statement line item. You should have five asset T-accounts, three liability T-accounts, and three shareholders' equity T-accounts. You should also have five temporary income/expense T-accounts. In addition, there is a temporary T-account for dividends.

2. Enter the January 31, 2004 balance sheet amounts as the beginning balances in each T-account for the permanent accounts.

Note that even if you don't know exactly what every account name means, you should be able to set up the T-account beginning balances based on the location of the account within the financial statements (i.e., the cash account is an asset and has a debit balance).

3. There are beginning balances in the Permanent/Balance Sheet T-Accounts, but no beginning balances in the Temporary/Income Statement T-Accounts. Please explain why in two sentences or less. Write your answer on the bottom of the T-accounts worksheet.

4. Prepare the appropriate journal entries for each of the following transactions under the Journal Entry tab of the ANF Worksheet (the first is done for you). You don't need to include explanations; just make sure that you have entered the account names and how much each account is debited or credited.

a. Inventory, costing $1,151,955 was purchased on account during the year.

b. Sales of $2,021,253 were made. Of these, $1,100,000 were on account.

c. The cost of the merchandise sold in (b) was $1,111,460.

d. Store Supplies costing $11,902 were purchased on account during the year.

e. The company collected cash of $1,081,070 from its customers for sales previously recorded as accounts receivable.

f. Cash of $1,117,884 was used to pay suppliers for goods and supplies previously purchased on account.

g. Property and equipment in the amount of 100,000 was purchased with cash.

h. The company paid $359,489 in cash for shares of its own common stock (i.e., it went to the stock market and bought back shares of its own stock.) This is known as treasury stock. It is recorded at cost as a debit in the owners' equity section of the balance sheet. Even though it is part of owners' equity, treasury stock has a debit balance because it reduces the amount of common stock outstanding.

i. The company received (in cash) interest income of $5,218.

j. The company recognized depreciation expense of $35,150. This expense is included under General & Administrative Expenses. For purposes of this case, depreciation expense reduces net property and equipment.

k. The company owes income taxes for fiscal year 2004 in the amount of $136,477. This liability is recorded under "Accrued Liabilities."

l. The company paid dividends in the amount of $46,438.

m. The following represents a single composite journal entry for all remaining transactions during the year.

Dr. Accrued Liabilities 79,657
Dr. General & Administrative Expenses 527,008
Cr. Supplies and Other Assets 1,000
Cr. Cash 554,435
Cr. Paid In Capital 1,112
Cr. Deferred Income Taxes and Other 50,118

5. Post each of the journal entries above to the respective the T-accounts.

6. Prepare a trial balance as of January 31, 2005 under the Trial Balance tab using the ending balances in the T-accounts. I have started the trial balance by giving you the correct ending balance in the cash account.

7. Fill in the blank amounts for the Income Statement and Balance Sheet under the appropriate tabs.

8. Create the fiscal year 2004 Statement of Retained Earnings under the appropriate tab.

9. Prepare the journal entry to close out the revenue, expense and dividend accounts to retained earnings (as the final journal entry on the journal entry tab).

10. Print out each of the 6 tabs (total of 6 pages) to hand in. Please staple the pages and put your name at the top of each page.

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ABERCROMBIE & FITCH CO

Accounting Problem
--------------------------------------------------------------------------------
Instructions:

1. Go to Blackboard and download "ANF Worksheet." The first tab has pre-made T-Accounts that do not yet have titles. Name the T-accounts for each balance sheet and income statement line item. You should have five asset T-accounts, three liability T-accounts, and three shareholders' equity T-accounts. You should also have five temporary income/expense T-accounts. In addition, there is a temporary T-account for dividends.

2. Enter the January 31, 2004 balance sheet amounts as the beginning balances in each T-account for the permanent accounts.

Note that even if you don't know exactly what every account name means, you should be able to set up the T-account beginning balances based on the location of the account within the financial statements (i.e., the cash account is an asset and has a debit balance).

3. There are beginning balances in ...

Solution Summary

This solution is comprised of a journal entries, trial balance, and income statement for Abercrombie & Fitch Co.

$2.19