Question
Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 762 U.S. and international locations. As of its
Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 762 U.S. and international locations. As of its fiscal year-end 2018, Costco had approximately 94.3 million members. Selected fiscal-year information from the company's balance sheets follows.
Selected Balance Sheet Data ($ millions) | 2018 | 2017 |
---|---|---|
Merchandise inventories | 11,040 | 9,834 |
Deferred membership income (liability) | 1,624 | 1,498 |
(a) During fiscal 2018, Costco collected $3,268 million cash for membership fees. (b) Costco recorded merchandise costs (that is, cost of goods sold) of $123,152 million in 2018. (c) Assume all of Costco's purchases are on account, and recorded in accounts payable. Prepare journal entries for transactions in parts a through c (amounts in millions).
Account | Debit | Credit | |
---|---|---|---|
a. | CASH | 3268 |
|
DEFERRED MEMBERSHIP INCOME |
| 3268 | |
To record cash received for membership fees during the year. | |||
b. | COST OF GOODS SOLD | 123152 | |
INVENTORY | 123152 | ||
To recognize the cost of goods sold. | |||
c. | INVENTORY | ? | |
ACCOUNTS PAYABLE | ? | ||
To record inventory purchases during the year |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started