The notes are part of the financial statements.

They give details that would clutter the statements. This case will help you learn to use a company’s inventory notes. Refer to Amazon.com, Inc. s consolidated financial statements and related notes in Appendix A at the end of the book and answer the following questions:

1. How much was Amazon.com, Inc.’s merchandise inventory at December 31, 2008? At December 31, 2007? Does Amazon.com, Inc., include all inventory that it handles in the inventory account on its balance sheet?

2. How does Amazon.com, Inc., value its inventories? Which cost method does the company use?

3. How much were Amazon.com, Inc.’s purchases of inventory during the year ended December 31, 2008?

4. Did Amazon.com, Inc.’s gross profit percentage on company sales improve or deteriorate in the year ended February 2, 2008, compared to the previous year?

5. Would you rate Amazon.com, Inc.’s rate of inventory turnover for the years ended February 2, 2008, and February 3, 2007, as fast or slow in comparison to most other companies in its industry? Explain your answer.