Question

a AS Problem 5-3A Computing merchandising amounts and formatting income statements c2P4 Valley Company's adjusted trial balance on August 31, its fiscal year-end, follows. It categorizes the following accounts as selling expenses: Sales Salaries Expense, Rent Expense-Selling Space, Store Supplies Expense, and Advertising Expense. It categorizes the remaining expenses as general and administrative. Credit $ 25,000 10,000 225,000 Debit Merchandise inventory (ending) $ 41.000 Other (noninventory) assets 130,400 Total liabilities K. Valley, Capital K. Valley, Withdrawals 8,000 Sales Sales discounts 2,250 Sales returns and allowances 12,000 Cost of goods sold 74.500 Sales salaries expense 32.000 Rent expense-Selling space 8.000 Store supplies expense 1.500 Advertising expense 13.000 Office salaries expense 28.500 Rent expense-Office space 3.600 Office supplies expense 400 Totals $365.130 365,150

Answer 1

1
Sales	225600
Less: Sales discounts	(2250)
Sales returns and allowances	(12000)
Net sales	211350
2
Cost of Merchandise Purchased
Invoice cost of merchandise purchased	92000
Purchase discounts received	(2000)
Purchase returns and allowances	(4500)
Costs of transportation-in	4600
Total cost of merchandise purchased	90100
3
VALLEY COMPANY
Income Statement
For Year Ended August 31
Sales		225,600
Less: Sales discounts	2,250
Less: Sales returns and allowances	12,000	14250
Net sales		211,350
Cost of goods sold		74,500
Gross profit		136,850
Expense
Selling expenses
Sales salaries expense	32,000
Rent expense - Selling space	8,000
Store supplies expense	1,500
Advertising expense	13,000
Total selling expenses		54,500
General and administrative expenses
Office salaries expense	28,500
Rent expense - Office space	3,600
Office supplies expense	400
Total general and administrative expenses		32,500
Total expenses		87,000
Net income		49,850
4
VALLEY COMPANY
Income Statement
For Year Ended August 31
Net sales		211,350
Expenses
Cost of goods sold	74,500
Selling expenses	54,500
General and administrative expenses	32,500
Total expenses		161,500
Net income		49,850