The Gap. Inc.. is a speciality retailer that operates stores selling clothes und

Question

The Gap. Inc.. is a speciality retailer that operates stores selling clothes under the trade names Gap. Banana Republic, and Old Navy. Assume that you are employed as a stock analyst and your boss has just completed a review of the annual report of The Gap. Inc.. for the year ended January 31. 2011 She provided you with her notes, but they are missing some information that you need. Her notes show that the ending inventory for Gap in the current year was $1,602 million and in the previous year it was $1,477 million Net Sales for the current year were $14,664 million Gross Profit was $5,869 million and Net Income was $1, 204 million. Required: Determine the cost of goods sold and amount of purchases (Enter your answers in millions.) Cost of Goods Sold million Purchase Amount million Cost of Goods Sold million Purchase Amount million

Explanation / Answer

The Gap Inc Details Amt $ million a Net Sales Current Year                               14,664 b Gross Profit                                   5,889 c Cost of Goods sold =a-b=                                 8,775 Assume purchase was k million Given : Opening Inventory                                   1,477 Add Purchase   k Less Closing stock                                   1,602 Cost of Goods Sold= 1477+k-1602=8775 k=8900 So Purchase was                                   8,900 Ans   Cost of Goods sold                                 8,775 Purchase                                   8,900

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