Use the Target Corporations Form 10K to answer the following

Use the Target Corporation’s Form 10-K to answer the following questions related to Target’s fiscal year end of January 30, 2016. Target’s Form 10-K is available at https://www.sec.gov/cgi-bin/viewer?action=view&cik=27419&accession_number=0000027419-16-000043&xbrl_type=v# Section 2: Chapter 3 material: What percentage of Target’s total revenues end up as net earnings? What percentage of Target’s sales go to pay for the costs of the goods being sold? What costs does Target include in its Cost of Sales account? When does Target recognize revenue from the sale of gift cards?

Solution

Question 1: Percentage of Target’s total revenues end up as net earnings-

Total revenue for the year ended on January 30, 2016 = $73,785 million

Net earnings for the year ended on January 30, 2016 = $3,363 million

Percentage of net earnings out of total revenue = ($3,363 million ÷ $73,785 million) x 100= 4.55%   

Question 2: Percentage of Target’s sales go to pay for the costs of the goods being sold-

Total revenue for the year ended on January 30, 2016 = $73,785 million

Cost of Goods sales during the year ended on Januay 30, 2016 = $51,997 million

Percentage of cost of goods sold out of total sales = ($51,997 ÷ $73,785) x 100 = 70.4%

Question 3: Costs that include in the Cost of Sales account-

Total cost of products sold includes -

1. Freight expenses associated with moving merchandise from our endors to our distribution centers and our retail stores.

2. Vendor allowans that are not a reimbursement of specific, incremental, and identifiable costs.

3. Inventory shrink / Physical inventory losses

4. Markdowns

5. Outbound shipping and handling expenses associated with sales to our guests

6. Cash discounts

7. Distribution center costs, including compensation and benefits costs

8. Import costs

Question 4:

Revenue from gift card sales is recognized upon gift card redemption.