Review the opening feature of this chapter dealing with International Princess Project and the entrepreneurial owner, Shannon Keith.

Required

1. Assume that International Princess Project sells a $300 gift certificate to a customer, collecting the $300 cash in advance. Prepare the journal entry for the

(a) Collection of the cash for delivery of the gift certificate to the customer

(b) Revenue from the subsequent delivery of merchandise when the gift certificate is used.

2. How can keeping less inventory help to improve International Princess Project’s profit margin?

3. Shannon Keith understands that many companies carry considerable inventory, and she is thinking of carrying additional inventory of merchandise for sale. Shannon desires your advice on the pros and cons of carrying such inventory. Provide at least one reason for, and one reason against, carrying additional inventory.