Target Case (Static) [LO2-4, 2-8] Target Corporation prepares its financial statements according to U.S. GAAP. Target's financial statements and disclosure notes for the year ended February 1, 2020, are available here. This material also is available under the Investor Relations link at the company's website (www.target.com). Required: 1. What amount did Target report for total assets, total liabilities, and total shareholders' equity (labeled "Shareholders' investment") in the most recent year? Show that the basic accounting equation remains in balance. 2. a. Find sales revenue (labeled "Sales") in the income statement (labeled "Consolidated Statement of Operations") and record sales for the year, assuming all sales were for cash. b. Find total cost of goods sold (labeled "Cost of sales") in the income statement and record the journal entry for cost of goods sold for the year. c. Record inventory purchases for the year, assuming all were on account. (Hint: To calculate the amount of purchases, use a T- account for inventory and input the beginning and ending balances of inventory from the balance sheet. Input the credit to inventory from requirement 2(b) and solve for the missing amount to calculate inventory purchases). 3. Note 9 provides information on Target's current assets. Assume all prepaid expenses are for prepaid insurance and that insurance expense comprises $50 million of the $16,233 million of selling, general, and administrative expenses reported in the income statement for the year ended February 1, 2020. How much cash did Target pay for insurance coverage during the year? Prepare the adjusting entry Target would make to record all insurance expense for the year. What would be the effect on the income statement and balance sheet if Target didn't record an adjusting entry for prepaid expenses? 4. a. By how much did retained earnings increase/decrease in the most recent year compared to the previous year? b. Target reduces retained earnings for "Dividends declared" and "Repurchase of stock." These two amounts totaled $2,865 million in the most recent year. Using this amount and your answer in (a), compute Target's net income. Verify your answer by finding net income (labeled "Net earnings") in the income statement. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Req 3C Req 4 What amount did Target report for total assets, total liabilities, and total shareholders' equity (labeled "Shareholders' investment") in the most recent year? Show that the basic accounting equation remains in balance. Note: Enter your answers in millions, not in dollars (i.e., 10,000,000 should be entered as 10). Assets = Liabilities Shareholders' Equity Req 1 Req 2 Req 3A Req 3B Req 3C Req 4 (a) Find sales revenue (labeled "Sales") in the income statement (labeled "Consolidated Statement of Operations") and record sales for the year, assuming all sales were for cash. (b) Find total cost of goods sold (labeled "Cost of sales") in the income statement and record the journal entry for cost of goods sold for the year. (c) Record inventory purchases for the year, assuming all were on account. (Hint: To calculate the amount of purchases, use a T-account for inventory and input the beginning and ending balances of inventory from the balance sheet. Input the credit to inventory from requirement 2(b) and solve for the missing amount to calculate inventory purchases). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, not in dollars (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 1 2 3 Record the sales for the year, assuming all sales were for cash. Note: Enter debits before credits. Transaction (a) General Journal Debit Credit Record entry Clear entry View general journal Show less Req 1 Req 2 Req 3A Req 3B Req 3C Req 4 (a) Find sales revenue (labeled "Sales") in the income statement (labeled "Consolidated Statement of Operations") and record sales for the year, assuming all sales were for cash. (b) Find total cost of goods sold (labeled "Cost of sales") in the income statement and record the journal entry for cost of goods sold for the year. (c) Record inventory purchases for the year, assuming all were on account. (Hint: To calculate the amount of purchases, use a T-account for inventory and input the beginning and ending balances of inventory from the balance sheet. Input the credit to inventory from requirement 2(b) and solve for the missing amount to calculate inventory purchases). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, not in dollars (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet < 1 2 3 Record the journal entry for cost of goods sold for the year. Note: Enter debits before credits. Transaction (b) General Journal Debit Credit Record entry Clear entry View general journal > Show less Req 1 Req 2 Req 3A Req 3B Req 3C Req 4 (a) Find sales revenue (labeled "Sales") in the income statement (labeled "Consolidated Statement of Operations") and record sales for the year, assuming all sales were for cash. (b) Find total cost of goods sold (labeled "Cost of sales") in the income statement and record the journal entry for cost of goods sold for the year. (c) Record inventory purchases for the year, assuming all were on account. (Hint: To calculate the amount of purchases, use a T-account for inventory and input the beginning and ending balances of inventory from the balance sheet. Input the credit to inventory from requirement 2(b) and solve for the missing amount to calculate inventory purchases). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, not in dollars (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 1 2 3 Record inventory purchases for the year, assuming all were on account. Note: Enter debits before credits. Transaction (c) General Journal Debit Credit Record entry Clear entry View general journal Show less Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Req 3C Req 4 Note 9 provides information on Target's current assets. Assume all prepaid expenses are for prepaid insurance and that insurance expense comprises $50 million of the $16,233 million of selling, general, and administrative expenses reported in the income statement for the year ended February 1, 2020. How much cash did Target pay for insurance coverage during the year? Note: Enter your answers in millions, not in dollars (i.e., 10,000,000 should be entered as 10). Cash paid for insurance coverage million < Req 2 Req 3B > Show less Req 1 Req 2 Req 3A Req 3B Req 3C Req 4 Note 9 provides information on Target's current assets. Assume all prepaid expenses are for prepaid insurance and that insurance expense comprises $50 million of the $16,233 million of selling, general, and administrative expenses reported in the income statement for the year ended February 1, 2020. Prepare the adjusting entry Target would make to record all insurance expense for the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, not in dollars (i.e., 10,000,000 should be entered as 10). Show less View transaction list Journal entry worksheet 1 Record the adjusting entry for expired insurance coverage and reduce the unexpired coverage to $154 million. Note: Enter debits before credits. Transaction 1 General Journal Debit Credit Record entry Clear entry View general journal Req 1 Req 2 Req 3A Req 3B Req 3C Req 4 Note 9 provides information on Target's current assets. Assume all prepaid expenses are for prepaid insurance and that insurance expense comprises $50 million of the $16,233 million of selling, general, and administrative expenses reported in the income statement for the year ended February 1, 2020. What would be the effect on the income statement and balance sheet if Target didn't record an adjusting entry for prepaid expenses? Show less Failure to record an adjusting entry for prepaid expenses would cause expenses to be and thus net income to be It would also cause the Balance Sheet, Assets and Shareholders' Equity to be < Req 3B Req 4 > Req 1 Req 2 Req 3A Req 3B Req 3C Req 4 (a) By how much did retained earnings increase/decrease in the most recent year compared to the previous year? (b) Target reduces retained earnings for "Dividends declared" and "Repurchase of stock." These two amounts totaled $2,865 million in the most recent year. Using this amount and your answer in (a), compute Target's net income. Verify your answer by finding net income (labeled "Net earnings") in the income statement. Note: Enter your answers in millions, not in dollars (i.e., 10,000,000 should be entered as 10). (a) Retained earnings (b) Net income < Req 3C Req 4 > Show less