Describe which combination of options would give the pep band the longest operating cycle.

Brief Exercise 6.4
Home Sweet Home Inc. is a retailer of home accessories. The company’s inventory balance a t the
beginning of the year was $600,000; Home Sweet Home purchased $500,000 of goods during
January, and sales during January were $800,000. What is the balance that would appear in Home Sweet Home’s inventory account on February 1 assuming use of a periodic inventory system?
Brief Exercise 6.5
Murphy C o. is a high-end retailer of fine fashions for men. Murphy’s inventory balance at the
beginning of the year is $300,000, and Murphy purchases $600,000 of goods during the year. Its
inventory balance at the end of the year is $250,000. What is the cost of goods sold for the year?

Exercise 6.1
As a fund-raiser, the pep band at Melrose University sells T-shirts fans can w ear when attending
the school’s 12 home basketball games. As the band’s business manager, you must choose among several options for ordering and selling the T-shirts.
1. Place a single order in October large enough to last the entire season. The band must pay for
the shirts in full when the order is placed. A 5 percent quantity discount applies to this option.

2. Place a series of small orders, as needed, throughout the season. Again, payment in full is due
when the order is submitted. No discount applies to this option.

3. Have band members sell shirts directly to members of the student body. Cash is collected
immediately as sales are made.

4. Sell all of the T-shirts through the university bookstore. The bookstore would receive a 6
percent commission on total sales and would remit to the band its share of the proceeds in a
lump-sum payment at the end of the season.

Describe which combination of options would give the pep band the shortest operating cycle.
Describe which combination of options would give the pep band the longest operating cycle.

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