Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 13

Finding Financial Information
Refer to the financial statements of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section of the text's Web site at www.mhhe.com/phillips4e.
1. How much inventory does the company hold on January 30, 2011 Does this represent an increase or decrease in comparison to the prior year
a. $10,188 (Decrease)
b. $10,188 (Increase)
c. $10,625 (Decrease)
d. $10,625 (Increase)
2. What method(s) does the company use to determine the cost of its inventory Describe where you found this information.
a. LIFO; Note 1
b. FIFO; Note 1
c. Weighted average cost; the Balance Sheet
d. Specific Identification; Management's Discussion and Analysis
3. Compute to one decimal place the company's inventory turnover ratio and days to sell for the most recent year.
a. 4.3 and 84.9
b. 4.2 and 86.9
c. 6.5 and 56.2
d. 4.6 and 79.3
4. Does the company believe FIFO, or weighted average cost, is a better method
TIP: See financial statement Note 3.
a. FIFO
b. Weighted average cost