п»їDEPARTMENT OF ACCOUNTANCY
SCHOOL OF ILLINOIS
TO: Emilio Velasquez
FROM: Shiyun (Sharon) Lu
DATE: Feb 8, 2015
SUBJECT: University bookstore textbook travails case
Reasons for utilization of the full method
Retailers use the retail strategy to record the importance of inventory because this method is simple to use and suitable for economic reporting goal under GAAP. Under selling method, inventory is registered at a predetermined percentage of the unique cost. Hence, ending stability of products on hand can be very easily estimated. Stores can keep track of the total price, purchase cost, cost of items available for sale, and sale volume during the period easily. School bookstores hire plenty of scholar employees who are less complex in saving and examining accurate inventory pricing level. In addition , yield rate is high to get the college book shop as college student employees tend to leave if they graduate from educational institutions. As a result, easy inventory value method like the retail method is more appropriate pertaining to retailers just like college bookstores. Major causes of the store's inventory obsolescence problem First, learners are frequently seeking other ways to purchase textbooks since the expense of textbooks gradually becomes unaffordable for most pupils. They may obtain textbooks from all other retailers who provide affordable prices. Some students even copy used books from earlier semesters or perhaps download unlawful e-text from the web. The product sales of books for the college bookstore lower tremendously seeing that fewer college students are willing to order textbooks through the college bookstore now. Second, more textbooks are purchased than sold because the university can be facing decreasing enrollment difficulty recently. Third, many classes are requiring college students to use the updated version of textbooks. However , the book shop spends money in buying back used books that are useless for most college students. Fourth, the turnover rate for come back managers who also...