Question

Consolidated Balance Sheets - USD (S) Jan. 28, 2017 Jan. 30, 2016 S in Millions Current assets: Cash and cash equivalents Receivables, net Merchandise inventories, net Prepaid expenses and other current S 1.137 Current assets of discontinued operations current assets Property and equipment Property and equipment, net Intangible assets, net of accumulated 1.147 Other assets Noncurrent assets of discontinued 1,010 Total assets Current liabilities Accounts payable expenses and other current iabilities Debt maturing within one year Current liabilities of discontinued Total current liabilities 441 Other long-term obligations Noncurrent liabilities of discontinued Stockholders' equity Preferred stock, S.01 par value, 5,000,000 shares authorized; no shares issued Common stock, S.0008 par value, 2,100,000,000 shares authorized: issued and outstanding 953,711,270 and 852,470,081 shares at January 28, 2017 and 948,964,792 and 645,723,803 shares at January 30, 2016 paid-in capital 5,067 5.010 Accumulated other comprehensive loss Retained earnings Less: Treasury stock at cost, 301,241, 189 shares at January 28, 2017 and January 30, 2016 (1,053) 5.092 8,900 (5.419) l Staples, Inc. stockholders' equity 5,376 Noncontrolling interests stockholders' equity 3,696 5.384 Total liabilities and stockholders' equity 5 8,271

1. Determine the Net Purchases of your company. Show and label your work. Use the following formula: Beginning Inventory + Net Purchases = Ending Inventory + COGS. Hint: Remember, the prior year’s ending inventory is the current year’s beginning inventory.

Beginning inventory=

Net purchases=

2. Calculate your company’s Historical Gross Profit Rate. Show and label your work! Use the following formula: Gross Profit from Prior Periods / Net Sales from Prior Periods.

3. Using the information calculated in “d” and “e” above, calculate ending inventory under the Gross Profit Method.

4. How does the ending inventory calculated in part “f” above compare to the actual ending inventory reported? Please provide both amounts in your answer.

Answer 1

Answer

Beginning invento Add: Purchases Less Cost of Goods Sold Ending Invento 1,791 13,435 Plug-in 13,489 1,737 Gross Profit from Prior Periods/Net Sales from Prior Periods Gross Profit from Prior Periods Net Sales from Prior Periods GP ratio 4,907 18,764 26.15% Beginning invento Add: Purchases Goods available Sales (at selling price) Less: Gross Profit 26.15% of sales Sales (at cost Ending Inventory at cost 1,791 13,435 15,226 18,247 4,772 13,475) 1,751 Ending inventory calculated in part"" above is higher by $ 14 compared to the actual ending inventory reported $1,737