Gap Inc.'s Sales, Cost of Goods Sold, and Gross Profit The consolidated balance sheets of Gap...

Gap Inc.'s Sales, Cost of Goods Sold, and Gross Profit

The consolidated balance sheets of Gap Inc. included merchandise inventory in the amount of $1,600 as of January 30, 2016 (the end of fiscal year 2015) and $1,639 as of January 31, 2015 (the end of fiscal year 2014). Net sales were $14,542 and $14,688 at the end of fiscal years 2015 and 2014, respectively. Cost of goods sold and occupancy expenses were $9,283 and $8,793 at the end of fiscal years 2015 and 2014, respectively. All amounts are from Gap Inc.’s 2015 Form 10-K.

How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry" and leave the amount box blank or enter "0". If the effect is negative, use the minus sign.
Enter amounts in millions of dollars. For example, 12,400,000,000 would be entered as 12,400.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

Liabilities

Equity

Revenues

–

Expenses

Income

Cash

No Entry

Sales

No Entry

Reconstruct the Cost of Goods Sold section of Gap Inc.'s 2015 income statement. Enter amounts in millions of dollars. For example, 12,400,000,000 would be entered as 12,400.

Gap Inc.
Cost of Goods Sold
For the Year 2015
Merchandise inventory, 1/31/15	$
Cost of goods purchased
Cost of goods available for sale	$
Merchandise inventory, 1/30/16
Cost of goods sold

5. Calculate the gross profit ratios for Gap Inc. for 2015 and 2014. If required, round the percentage to one decimal place.

Gap's 2015 gross profit ratio:	%
Gap's 2014 gross profit ratio:	%

Solutions

Expert Solution

Sl.No	Particulars	Computation	Amount in $
i	Merchandise inventory, 1/31/15	Given	1,639
ii	Cost of goods purchased	iii-i	9,244
iii	Cost of goods available for sale	iv+v	10,883
iv	Merchandise inventory, 1/30/16	Given	1,600
v	Cost of good sold	Given	9,283

Gap's 2015 Gross profit = Sales in 2015-cost of goods sold for 2015 = 14,542-9,283 = 5,259

Gap's 2014 Gross profit = Sales in 2014-cost of goods sold for 2014 = 14,688-8,793 = 5,895

Gap's 2015 gross profit ratio = Gap's 2015 Gross profit/sales in 2015 = 5,259/14,542 = 36.16%

Gap's 2014 gross profit ratio = Gap's 2014 Gross profit /sales in 2014 = 5,895/14,688 = 40.13%

jeff jeffy answered 1 year ago

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