Solution to BTN chapter 4&5 - Reporting in Action BTN...

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Reporting in Action — BTN 5-1 ($ millions for all parts) 1. Ending inventories at September 29, 2012: $791. Ending inventories at September 24, 2011: $776. 2. September 29, 2012: $791 / $176,064 = 0.0045 or 0.45% September 24, 2011: $776 / $116,371 = 0.0067 or 0.67% 3. Apple’s inventories are its smallest asset at September 29, 2012. Goodwill has a slightly larger balance, but every other asset account is at least double the value of its inventory. Although Apple does not carry a large inventory balance in comparison to its other assets, inventories are still an important item for Apple. 4. Reviewing notes to its financial statements, we see from Note 1 under the subheading “inventories” that Apple’s inventories are stated at the lower of cost or market. Apple uses the first-in-first-out basis to determine cost. Apple’s inventories consist mostly of finished goods. 5. a. Inventory turnover = Average inventory = ($791+ $776) / 2 = $783.50 Inventory turnover = $87,846 / $783.50 = 112.1 times b. Days’ sales in inventory = x 365 = ($791/$87,846) x 365 = 3.29 days 6. Solution depends on the financial statement information obtained.
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