Question

In: Accounting

Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods...

Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 582 locations 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 2010, Costco had approximately 60 million members. Selected fiscal-year information from the company's balance sheets follows. ($ millions).

Selected Balance Sheet Data ($ millions)

2010 2009
Merchandise inventories $5,638 $5,405
Deferred membership income (liability) 869 824


(a) During fiscal 2010, Costco collected $1,736 cash for membership fees. Use the financial statement effects template to record the cash collected for membership fees.
(b) In 2010, Costco recorded $67,995 million in merchandise costs (that is, cost of goods sold). Record this transaction in the financial statement effects template.
(c) Determine the value of merchandise that Costco purchased during fiscal-year 2010. Use the financial statement effects template to record these merchandise purchases. Assume all of Costco's purchases are on credit.

Use negative signs with your answers, when appropriate. Enter answers in millions.

Balance Sheet

Transaction Cash
Asset
+ Noncash
Assets
= Liabilities + Contributed
Capital
+ Earned
Capital
(a) Answer Answer Answer Answer Answer
(b) Answer Answer Answer Answer Answer
(c) Answer Answer Answer Answer Answer

Income Statement


Revenue

-

Expenses

=

Net Income
Answer Answer Answer
Answer Answer Answer
Answer Answer Answer

please answer all parts that say answer

Solutions

Expert Solution

  • All working forms part of the answer
  • Transaction ‘a’

Beginning balance of Deferred membership income $ 824 millions
Add: Cash collected during the year $ 1736 millions
Less: Ending balance $ 869 millions
Membership Income considered as revenues for 2010 = 824 + 1736 – 869 = $ 1,691 millions

  • Transaction ‘b’

Cost of Goods Sold = $ 67,995 millions
This would have decreased Inventories balance appearing for 2009 and its effect had been included in 2010 Inventories balance as Inventories account gets credited by the amount of cost of goods sold.

  • Transaction ‘c’

Inventories balance (2009) + Purchases – Inventories balance (2010) = Cost Of Goods Sold
$ 5,405 millions + Purchases - $ 5,638 = $ 67,995
5405 + Purchases – 5638 = 67995
Purchases = 67995 + 5638 – 5405
Purchases = $ 68,228

  • Answers, based on above working

Balance Sheet

Income Statement

Transaction

Cash Asset

Noncash

Liabilities

Contrib.

Earned

Revenues

Expenses

Net income

Assets

Capital

Capital

a

$                          1,736.00

$                                              -  

$                              1,736.00

$                                         -  

$                                         -  

$                                       -  

$                                        -  

$                                               -  

b

$                                       -  

$                             (67,995.00)

$                                           -  

$                                         -  

$                       (67,995.00)

$                                       -  

$                        67,995.00

$                             (67,995.00)

c

$                                       -  

$                               68,228.00

$                            68,228.00

$                                         -  

$                                         -  

$                                       -  

$                                        -  

$                                               -  


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