Ann Inc. reports the following in its 2019 annual report. $ thousands 2019 2018 2017 Gross...

Ann Inc. reports the following in its 2019 annual report.

$ thousands	2019	2018	2017
Gross sales	53,647	52,546	52,824
Sales allowance at year end	241.41	189.16	105.65

Calculate the Sales allowance/Gross sales for the past three years and discuss any trend in this metric.

What type of trends are indicated: favorable or unfavorable trend?

Solutions

Expert Solution

First of all, let us know what is the meaning if sales allowance

Sales Allowance - Sales Allowance is the allowance that is foregone from the amount receivable from the buyer for the errors made by the seller In terms of Quality, Quantity, Higher price charged etc . It is pertinent to note that here goods will not be returned to the seller by the buyer.

Calculation of % of sales allowance on sales for the past three years.

Particulars	2019	2018	2017
Gross Sales	53647	52546	52824
Sales Allowance	241.41	189.16	105.65

Sales Allowance/Gross Sales	0.45%	0.36%	0.20%

Here from 2017 to 2019 sales allowance as a percentage of sales has grown from 0.2 to 0.36 to 0.45

Since Sales Allowance are adverse items as it is the amount that is foregone from the customer an increase of the same as a % of gross sales is not favourable. More over this could also lead in loss of customers in the long term and detoriation of profits to the entity

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Marin Inc. reports the following liabilities (in thousands) on its January 31, 2017, balance sheet and...

Marin Inc. reports the following liabilities (in thousands) on its January 31, 2017, balance sheet and notes to the financial statements. Accounts payable $5,118.0 Mortgage payable $7,649.0 Accrued pension liability 1,580.0 Operating leases 1,825.0 Unearned rent revenue 1,301.0 Notes payable (due in 2020) 357.0 Bonds payable 1,969.0 Salaries and wages payable 585.0 Current portion of mortgage payable 2,098.0 Notes payable (due in 2018) 2,836.0 Income taxes payable 316.0 Unused operating line of credit 4,010.0 Warranty liability—current 1,837.0 a) Prepare the...

The following information is computed from Katy Inc.'s annual report for 2018. 2018 2017 Current assets...

The following information is computed from Katy Inc.'s annual report for 2018. 2018 2017 Current assets $ 2,731,020 $ 2,364,916 Property and equipment, net 10,960,286 8,516,833 Intangible assets, at cost less applicable amortization 294,775 255,919 $13,986,081 $11,137,668 Current liabilities $ 3,168,123 $ 2,210,735 Deferred federal income taxes 160,000 26,000 Mortgage note payable 456,000 - Stockholders' equity 10,201,958 8,900,933 $13,986,081 $11,137,668 Net sales $33,410,599 $25,804,285 Cost of goods sold (30,168,715) (23,159,745) Selling and administrative expense (2,000,000) (1,500,000) Interest expense (216,936) (39,456)...

Exercise 10-15 Larkspur, Inc. reports the following liabilities (in thousands) on its January 31, 2017, balance...

Exercise 10-15 Larkspur, Inc. reports the following liabilities (in thousands) on its January 31, 2017, balance sheet and notes to the financial statements. Accounts payable $5,006.0 Mortgage payable $7,033.0 Accrued pension liability 1,558.0 Operating leases 2,258.0 Unearned rent revenue 1,394.0 Notes payable (due in 2020) 347.0 Bonds payable 2,214.0 Salaries and wages payable 573.0 Current portion of mortgage payable 2,045.0 Notes payable (due in 2018) 2,724.0 Income taxes payable 304.0 Unused operating line of credit 3,914.0 Warranty liability—current 1,825.0 Identify...

The 2019 annual report for a company includes the following items in its footnotes: a. The...

The 2019 annual report for a company includes the following items in its footnotes: a. The useful life of machinery has been increased from 10 to 15 years. b. The expected tax rate used to calculate income tax provision has increased from 33% to 38%. c. The company has started to capitalize small tools purchased beginning in 2006. For each of the above, determine the effect (higher, lower, or unchanged) of the change on the ratios listed below for the...

The 2017 annual report of Albany Corporation reports the following (in millions): Amortized Cost Fair Value...

The 2017 annual report of Albany Corporation reports the following (in millions): Amortized Cost Fair Value December 31, 2016 Short-term investments — available-for-sale debt securities $840.7 $835.0 Short-term investments — trading debt securities 108.4 94.2 Total short-term investments $949.1 $929.2 December 31, 2017 Short-term investments — available-for-sale debt securities $ 462.9 $ 463.4 Short-term investments — trading debt securities 79.5 75.6 Total short-term investments $542.4 $539.0 a. What amount does Albany report as trading debt securities on its balance sheets...

The following is an excerpt from the Freight Train, Inc.’s 2019 annual report: In Millions 2019...

The following is an excerpt from the Freight Train, Inc.’s 2019 annual report: In Millions 2019 2018 Debt $60,744 $59,484 Equity 49,693 46,445 Required Calculate the debt-to-equity ratio for Freight Train, Inc. for 2019 and 2018 based on year end values of debt and equity. b. The present values of the operating leases totaled $6,192 and $6,448 in 2019 and 2018, respectively. Assume that the leases were capitalized (were included in the total amount of debt reported). Recalculate the debt-to-equity...

In using Verizon Communications Inc 2017 to 2019 SEC 10K Annual financial statements reports( Balance sheet,...

In using Verizon Communications Inc 2017 to 2019 SEC 10K Annual financial statements reports( Balance sheet, Income Statement and Cash Flow Statement) describe Verizon's Capital Expenditures and Investment Decisions.

Sanchez, Inc. reports the following liabilities (in thousands) on its December 31, 2022, balance sheet and...

Sanchez, Inc. reports the following liabilities (in thousands) on its December 31, 2022, balance sheet and notes to the financial statements. Accounts payable $4,263.9 Mortgage payable $6,746.7 Unearned rent revenue 1,058.1 Notes payable (due in 2025) 335.6 Bonds payable 1,961.2 Salaries and wages payable 858.1 Current portion of mortgage payable 1,992.2 Notes payable (due in 2023) 2,563.6 Income taxes payable 265.2 Warranty liability—current 1,417.3 Prepare the liabilities section of Sanchez’s balance sheet as at December 31, 2022.

Refer to the 2017 annual report of Woolworth on its website, and answer the following questions...

Refer to the 2017 annual report of Woolworth on its website, and answer the following questions using the consolidated income statement and balance sheet/ statement of financial position and notes to the consolidated financial statements. The Woolworth income statement shows a deduction (in brackets) for income tax expense. Would this expense item be seen in the income statement of a partnership? Explain your answer. In the statement of changes in equity regarding retained earnings, how is the total profit available...

Refer to the 2017 annual report of Woolworth on its website, and answer the following questions...

Refer to the 2017 annual report of Woolworth on its website, and answer the following questions using the consolidated income statement and balance sheet/ statement of financial position and notes to the consolidated financial statements 1.Refer to the balance sheet (statement of financial position) of Woolworth and the note titled ‘issued capital’. How do these differ from that of a typical partnership? Explain. 2.Woolworth is required to produce a statement of cash flows (cash flow statement) and include this in...

Subjects