Question

Inferring Transactions from Financial Statements
Lowe's is the second-largest home improvement retailer in the world, with 1,857 stores. During its 2015 fiscal year ended in January 2016, Lowe's purchased merchandise inventory at a cost of $39,051 ($ millions). Assume all purchases were made on account and accounts payable is only used for inventory purchases. The following T-accounts reflect the information contained in the company's 2014 and 2015 balance sheets.

Merchandise Inventories
8,911	2014 Bal
9,458	2015 Bal

Accounts Payable
5,124	2014 Bal
5,633	2015 Bal

a. Use the financial statement effects template to record Lowe's purchases during fiscal 2015. Use a negative sign with answers, if appropriate.

	Balance Sheet Income Statment Transaction Cash Asset Non Cash Asset Liabilities Contrib Capital Earned Capital Revenues Expenses Net Income Recognize Cost of Goods Sold
b. What amount did Lowe's pay in cash to its suppliers during fiscal-year 2015?

Answer 1

Part a
	Balance sheet					Income statement
Transaction	Cash asset	Non cash asset	Liabilities	Contrib Capital	Earned Capital	Revenues	Expenses	Net income
Purchase of inventory on account	-	39,051	39,051	-	-	-	-	-
Part b	Lowe's will pay in cash to its suppliers during fiscal-year 2015 is (39,051-5,633+5,124) = $38,542