Preparing a balance sheet and income statement. The accounting records of The GAP. a retail clothing store, reveal the following for a recent year (amounts in thousands):

Balance Sheet Items Accounts Cash Payable Common Stock Merchandise Inventory Notes Payable to Banks (due within one year)

Other Long-term Current Debt Assets Other Current Liabilities January 31 Year 9 Year 10 684,130 $ 805,945 565,253 450,352 354,719 135,034 1,056,444 1,462,045 90,690 168,961 496,455 784,925 250,127 285,393 778,283 777,973 Other Noncurrent Assets 215,725 275,651 Other Noncurrent Liabilities 340,682 417,907 Property, Plant, and Equipment (net) 1,876,370 2,715,315 Retained Earnings 1,218,960 2,098,011 For the Year Ended Income Statement Items January 31, Year 10 Administrative Expenses $ 803,995 Cost of Goods Sold 6,775,262 Income Tax Expense 657,884 Interest Expense 31,755 Sales Revenue 11,635,398 Selling Expenses 2,239,437

a. Prepare a comparative balance sheet for The GAP as of January 31, Year 9 and Year 10.
Classify each balance sheet item into one of the following categories: current assets, noncurrent assets, current liabilities, noncurrent liabilities, and shareholders' equity.

b. Prepare an income statement for The GAP for the year ended January 3 1 , Year 1 0. Separate income items into revenues and expenses.

c. Prepare a schedule explaining the change in retained earnings between January 31, Year 9 and January 31, Year 10.

d. Compare the amounts on The GAP's balance sheet on January 31, Year 9 and January 31, Year 10. Identify the major changes and suggest possible explanations for these changes.