Question

Inferring Transactions from Financial Statements

Answer 1

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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