On June 30, 2018, the bookstore informed me that, during the month of June, they had...
On June 30, 2018, the bookstore informed me that, during the month of June, they had returned $323,000 in textbooks and expected credit memos from vendors for that amount. The credit memos were in-transit at year-end, meaning they had not been received prior to June 30. As a result:
- I accrued $323,000 in-transit credit memos on June 30, 2018 to recognize the returns in fiscal year ending June 30, 2018.
- I reversed those accruals on July 1, 2018, in the next fiscal year.
When the fiscal year ended the following year on June 30, 2019, we had the following problems with the bookstore:
- Purchases expensed for the textbooks in fiscal year 2019 was approximately $200,000 higher than expected
- Bookstore operating margin was reduced almost 10%, where it had been consistent for the past 10 years (clarification - cost of goods sold percentage went up and gross margin percentage went down unexpectedly. This had nothing to do with price changes, changes in sales or demand.)
Question: What could have happened to cause the $200,000 in unexpected purchases expense in 2019?
Homework Answers
Reason behind increase in increase in unexpected purchase .
* Disproportionate rise in prices of books .
* Lower supply in the market which incresed the price.
* Cancellation of a big purchase order
* Increase in direct expenses associated with purchase
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