Gap Inc.'s Sales, Cost of Goods Sold, and Gross Profit The consolidated balance sheets of Gap Inc. included merchandise inventory in the amount of $1,599 as of January 30, 2016 (the end of fiscal year 2015) and $1,631 as of January 31, 2015 (the end of fiscal year 2014). Net sales were $14,554 and $14,643 at the end of fiscal years 2015 and 2014, respectively. Cost of goods sold and occupancy expenses were $9,289 and $8,786 at the end of fiscal years 2015 and 2014, respectively. All amounts are from Gap Inc.'s 2015 Form 10-K. Required: 1. Gap Inc. does not include accounts receivable on its balance sheet, most likely due to A prohibition by its bankers to extend credit to its customers. January 30, 2016. Credit card sales and a lack of sales on credit. Rich clients who always pay cash. Sales Returns and Allowances ry few credit transactions which are not reported due to materiality principle. How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank or enter "0". If the effect is negative, use the minus sign. Enter amounts in millions of dollars. For example, 12,400,000,000 would be entered as 12,400. 2. Identify and analyze the transaction to record sales during the year ended January 30, 2016. Activity Accounts Financing Statement(s) Investing Operating How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank or ente Enter amounts in millions of dollars. For example, 12,400,000,000 would be entered as 12,400. 2. Identify and analyze the transaction to record sales during the year ended January 30, 2016. Activity Accounts Statement(s) Cash Increase, Sales Increase Cash Increase, Sales Decrease How does this entry affect the accounting equation If a financial statement item is not affected, select Cash Decrease, Sales Increase box blank or ent Enter amounts in millions of dollars. For example, 1 Cash Decrease, Sales Decrease as 12,400. 2. Identify and analyze the transaction to record sales during the year ended January 30, 2016. Activity Accounts Statement(s) Balance Sheet only How does this entry affect the accounting equat If a financial statement item is not affected, sele Balance Sheet and Income Statement blank or ent Enter amounts in millions of dollars. For exampl Income Statement only 12,400. How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank or enter "O". If the effect is negative, use the minus sign. Enter amounts in millions of dollars. For example, 12,400,000,000 would be entered as 12,400. Balance Sheet Income Statement Stockholders' Assets Liabilities + Equity Revenues Expenses 3. Gap Inc. sets forth net sales but not gross sales on its income statement. What type(s) of deduction(s) would be made from gross sales to arrive at the amount of net sales reported? Cost of goods sold Goods Sold section of Gap Inc.'s 2015 income statement. Enter amounts in millions of dollars. For example, 12,400,000,000 would be entered as 12,400. Purchase discounts Purchases d Sales returns and allowances 5 Income Statement Net Revenues Expenses Income 4. Reconstruct the Cost of Goods Sold section of Gap Inc.'s 2015 income statement. Enter amounts in millions of dollars. For example, 12,400,000,000 would be entered as 12,400. Gap Inc. Cost of Goods Sold For the Year 2015 5. Calculate the gross profit ratios for Gap Inc. for 2015 and 2014. If required, round the percentage to one decimal place. Gap's 2015 gross profit ratio: % Gap's 2014 gross profit ratio: % Is the company's performance improving? 4. Reconstruct the Cost of Goods Sold section of Gap Inc.'s 2015 inco Gap Inc. Cost of Goods Sold For the Year 2015 Cost of goods sold 1/31/15 Merchandise inventory, 1/31/15 Merchandise inventory, 1/30/16 Sales for the year ended 1/30/16 Work in process inventory, 1/31/15 Calculate the gross profit ratios for Gan Ine for 2015 and 2014. If 4. Reconstruct the cost of Goods Sold sectio Gap Inc. Cost of Goods Sold For the Year 2015 Cost of goods purchased Cost of goods returned Cost of goods sold Cost of overhead Cost of revenue ofit ratios for Gap Ir Gap's 2015 gross profit ratio: 4. Reconstruct the Cost of Goods S Gap Inc. Cost of Goods Sold For the Year 2015 $ Cost of goods available for sale Cost of goods sold Net income ratios i Net profit Total revenue Gan's 2014 gross profit ratio. 4. Reconstruct the Cost of Goods Sold section of Gap Inc Gap Inc. Cost of Goods Sold For the Year 2015 $ $ Merchandise inventory, 1/31/15 Merchandise inventory, 1/30/16 fatios for Gap Inc. for 2015 Purchase discounts Returns and allowances Sales discounts 4. Reconstruct the Cost of Goods Sold section of Gap Inc. Cost of Goods Sold For the Year 2015 $ Cost of goods purchased ofit ratios for Gap Inc. fc Cost of goods returned atio: Cost of goods sold atio: Cost of sales discounts ance improving? Cost of sales returns 5. Calculate the gross profit ratios for Gap Inc. for 2015 and 2014. If required, round the percentage to one decimal place. % Gap's 2015 cross profit ratio: No Gap's foss profit ratio: Yes Is the y's performance improving? %