Question

Module 2

E2-31. 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. February 2019 February 2018 Selected Balance Sheet Data ($ millions) Merchandise inventory . . Accounts Payable. . $2,131 1,126 $1,997 1,181 a. The Gap purchased inventories totaling $10,392 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 Feb- ruary 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? Record this with the financial state- ment effects template.

Answer 1

Requirement a:

Cost of goods sold for the year ended Feb 02,2019
Opening merchandise inventory	$         1,997
Add: Purchased inventories	$      10,392
Less: Closing merchandise inventory	$       (2,131)
	$      10,258

Requirement b:

Payment to suppliers: $ 10,447

Financial statement template

Assets	=	Liabilities	+	Shareholders equity
Cash	=	Accounts payable	+
$      (10,447)	=	$      (10,447)		$                             -

working:

Accounts payable
		Beg.Bal	$         1,181
Payment (bal.fig)	$      10,447	Purchases	$      10,392
		End bal	$         1,126