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 information contained in the company’s 2014 and 2015 balance sheets.

Merchandise Inventories Accounts Payable 2014 Bal. 8,911 2015 Bal. 9,458 5,124 2014 Bal.

5,633 2015 Bal.

a. Use the financial statement effects template to record Lowe’s purchases during fiscal 2015.

b. What amount did Lowe’s pay in cash to its suppliers during fiscal-year 2015? Explain.

c. Use the financial statement effects template to record cost of sales for 2015.