Question

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, advertising expense. It categorizes the remaining expenses as general and administrative. Credit $ 45,045 128,576 266,760 Debit Merchandise inventory (ending) $ 39,000 Other (noninventory) assets 156,000 Total liabilities K. Valley, Capital K. Valley, Withdrawals 8,000 Sales Sales discounts 4,081 Sales returns and allowances 17,606 Cost of goods sold 103, 121 Sales salaries expense 36,546 Rent expense-Selling space 12,538 Store supplies expense 3,201 Advertising expense 22,675 Office salaries expense 33,345 Rent expense-office space 3,201 Office supplies expense 1,067 Totals $440,381 $440,381 Beginning merchandise inventory was $31,473. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs. Invoice cost of merchandise purchases Purchases discounts received Purchases returns and allowances Costs of transportation-in $114,660 2,408 5,504 3,900 Required: < Prev 2 of 3 !! Next >

Answer 1

Solution Requirement 1: Net Sales Sales Less: Sales discounts Less: Sales Returns and allowances Net Sales $266,760 ($4,081) ($17,606) $245,073 Company's net sales for the year $245,073 Requirement 2: Cost of Merchandise Purchased Invoice cost of merchandise purchased Less: Purchase discount received Less: Purchase returns and allowances Add: Cost of transportation-in Total cost of merchandise purchased $114,660 ($2,408) ($5,504) $3,900 $110,648 Total cost of merchandise purchased $110,648

Requirement 3: $266,760 $4,081 $17,606 VALLEY COMPANY Income Statement For Year Ended August 31 Sales Less: Sales discounts Less: Sales Returns and allowances Net Sales Cost of Goods sold Gross profit Expense Selling expenses Sales salaries expense Rent expense - Selling space Store supplies expense Advertising expense $21,687 $245,073 $103,121 $141,952 $36,546 $12,538 $3,201 $22,675 $74,960 Total Selling expenses General and administrative expenses Office salaries expense Rent expense - Office space Office supplies expense $33,345 $3,201 $1,067 Total general and administrative expenses Total expenses Net Income $37,613 $112,573 $29,379 Requirement 4: 1 $245,073 VALLEY COMPANY Income Statement For Year Ended August 31 Net Sales Expenses Cost of Goods sold Selling expenses General and administrative expenses $103,121) $74,960 $37,613 Total expenses Net Income $215,694 $29,379