Question

Check my 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 $ 49,665 57,883 82,659 294,120 Debit Merchandise inventory (ending) $ 43,000 Other (noninventory) assets 172,000 Total liabilities Common stock Retained earnings Dividends 8,000 Sales Sales discounts 4,500 Sales returns and allowances 19,412 Cost of goods sold 113,298 Sales salaries expense 40,294 Rent expense-Selling space 13,824 Store supplies expense 3,529 Advertising expense 25,000 Office salaries expense 36, 765 Rent expense-Office space 3,529 Office supplies expense 1,176 Totals $484,327 $484,327 Beginning merchandise inventory was $34,701. 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 $126, 420 2,655 6,068 3,900 Required: 1. Compute the company's net sales for the year. 2. Compute the company's total cost of merchandise purchased for the year. 3. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and

Answer 1

1) Net sales

Sales Less: sales discount Sales return and allowances	$4500 $19412	$294120 $23912
Net sales		$270208

2)

  

1) Cost of machine purchased

Invoice cost of merchandise purchase Less: Purchase discount received Purchase return and allowances	$126420 $2655 $6068
Add: cost of transportation in	$117697 $3900
Total cost of merchandise purchased	$121597

3)   

valley company
mulch step income statement
sales		$294120
less: sales discount	$4500
less: sales returns and allowances	$19412	$23912
net sales		$270208
less: cost of goods sold		$113298
gross profit		$156910
less: expense
sales salaries expense	$40294
rent expense selling expense	$13824
store supplies expense	$3529
advertising expense	$25000
total selling expense		$82647
general and administrative expense
office salaries expense	$36765
rent expense office expense	$3529
office supply expense	$1176
total general administrative expense		$41470
net income		$32793