Inferring Transactions from Financial Statements Lowe\'s is the second-largest h
ID: 2333285 • Letter: I
Question
Inferring Transactions from Financial Statements Lowe's is the second-largest home improvement retailer in the world, with 1,857 stores. During its 2015 fiscal year ended in January 2016, Lowe's purchased merchandise inventory at a cost of $39,129 (S millions). Assume all purchases were made on account and accounts payable is only used for inventory purchases. The following T-accounts reflect information contained in the company's 2014 and 2015 balance sheets. Merchandise Inventories Accounts Payable 2014 Bal. 2014 8.930 5,105 Bal. 2015 9,439 Bal. 2015 Bal. 5,652 a. Use the financial statement effects template to record Lowe's purchases during fiscal 2015. Use a negative sign with answers, if appropriate Income Statement Balance Sheet Noncash Assets Contrib. Capital Earned Capital Transaction Cash Asset+ - Liabilities+ Revenues Expenses - Net income Purchase of inventory on account b. What amount did Lowe's pay in cash to its suppliers during fiscal-year 2015? x million c. Use the financial statement effects template to record cost of sales for 2015. Use a negative sign with answers if appropriate. Income Statement Balance Sheet Earned Noncash Assets Contrib Capital Transaction Cash Asset + - Liabilities Revenues Expenses - Net income Capital Recognize cost of goods sold. 0 CheckExplanation / Answer
(a) Balancesheet Income statement Transaction Cash Assets + Non Cah assets = Liabilities + Contrib. Capital + Earned Capital Revenues - Expense = Net Income Purchase of Invntory on account 0 $39,129 $39,129 0 0 0 0 0 (b) Computation of cash paid to supplier = Opening balance of Accounts payable + Purchases made during the year - Closing balance of Account payble = $5,105 + $39,129 - $5,652 = $ 38,582 (c) Balancesheet Income statement Transaction Cash Assets + Non Cah assets = Liabilities + Contrib. Capital + Earned Capital Revenues - Expense = Net Income Recognize cost of goods sold 0 $38,620 0 0 $38,620 0 $38,620 $38,620 Computation of Cost of goods sold = Opening balance of Inventory + Purchases made during the year - Closing balace = $8,930 + $39,129 - $9,439 = $38,620