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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 annual report for the fiscal year ended February 2, 2019.
Selected Balance Sheet Data ($ millions) February 2019 February 2018
Inventories $2,131 $1,997
Accounts Payable 1,126 1,181
a. The Gap purchased inventories totaling $10,392 million for the fiscal year ended February 2, 2019. Use the financial statement effects template to record cost of goods sold for The Gap's fiscal year ended February 2, 2019. (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?

Respuesta :

Tundexi

Gap's cost of goods sold is $10,258 million and Cash paid to supplier is $10,447 million.

Let understand that Cost of good sold refers to amount of expenses incurred to produce the goods produced by a firm.

  • The formulae for deriving the Cost of Goods Sold is {Beginning Inventories + Purchases – Ending Inventories}.

  • Information given are Purchased inventories $10,392, Ending inventories $2,131 and Beginning inventories $1,997

Cost of goods sold = $1,997 + $10,392 - $2,131

Cost of goods sold = $10,258

  • In conclusion, the amount of Gap's cost of goods sold is $10,258

Let understand that Cash paid to accounts payable refers to net amount paid to supplier of goods.

  • The formulae for deriving the Cash paid to accounts payable is  Beginning balance for 2015 + Purchases - Ending balance for 2015

Cash paid to accounts payable = $1,181 + $10,392 - $1,126

Cash paid to accounts payable = $10,447

  • In conclusion, the amount of Gap's Cash paid to supplier is $10,447

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