Inferring Transactions from Financial Statements The GAP is a global clothing re
ID: 2785914 • Letter: I
Question
Inferring Transactions from Financial Statements The GAP is a global clothing retailer for men, women, children, and babies. The following information is taken from The Gap's fiscal 2015 annual report. Selected Balance Sheet Data ($ millions) 2015 2014 Inventories $1,901 $1,861 Accounts Payable 1,140 1,145 a. The Gap purchased inventories totaling $10,314 million during fiscal 2015. Use the financial statement effects template to record cost of goods sold for The Gap's fiscal year ended 2015. (Assume accounts payable is used only for recording purchases of inventories and all inventories are purchased on credit.) b. What amount did the company pay to suppliers during the year? Record this with the financial statement effects template.
Explanation / Answer
Solution-a
Beginning Inventory = $1,861
Ending Inventory = $1,901
Purchase = $10,314
Cost of Goods Sold = Beginning Inventory + Purchase - Ending Inventory
Cost of Goods Sold = $1,861 + $10,314 - $1,901
Cost of Goods Sold = $10,274
Solution-b
Beginning Account Payable = $1,145
Ending Account Payable = $1,140
Credit Purchase = $10,314
Cash Paid to Suppliers = Beginning Account Payable + Credit Purchase - Ending Account Payable
Cash Paid to Supplies = $1,145 + $10,314 - $1,140
Cash Paid to Supplies = $10,319