Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 721locations across the U.S. as well as in Canada, the United Kingdom, Japan, Australia, South Korea, Taiwan, Mexico and Puerto Rico. As of its fiscal year-end 2016, Costco had approximately 86.7 million members. Selected fiscal-year information from the company's balance sheets follows.
Selected Balance Sheet Data ($ millions) |
2016 | 2015 |
---|---|---|
Merchandise inventories | $8,969 | $8,908 |
Deferred membership income (liability) | 1,362 | 1,269 |
(a) During fiscal 2016, Costco collected $2,739 million cash for
membership fees. Use the financial statement effects template to
record the cash collected for membership fees.
(b) Costco recorded merchandise costs (that is, cost of goods sold)
of $102,901 million in 2016. Record this transaction in the
financial statement effects template.
(c) Determine the value of merchandise that Costco purchased during
2016. Use the financial statement effects template to record these
merchandise purchases. Assume all of Costco's purchases are on
credit.
ANSWER
Balance sheet ($ in million) | |||||||||
Transaction | Cash Assets | + | Non Cash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital |
(a) | $ 2,739 | + | 0 | = | $ 2,739 | + | 0 | + | 0 |
(b) | 0 | + | $ -1,02,901 | = | 0 | + | 0 | + | $ -1,02,901 |
(c) | 0 | + | $ 1,02,962 | = | $ 1,02,962 | + | 0 | + | 0 |
Income Statement ($ in million) | |||||||||
Transaction | Revenue | - | Expense | = | Net Income | ||||
(a) | 0 | - | 0 | = | 0 | ||||
(b) | 0 | - | $ 1,02,901 | = | $ -1,02,901 | ||||
(c) | 0 | - | 0 | = | 0 | ||||
Workings: | |||||||||
(c) Cost of goods sold = Opening Inventory + Purchases - sales | |||||||||
Purchases = $102901 - $8908 + $8969 | |||||||||
Purchases = $102962 |
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Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods...
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