Question

Award: 5.00 points Problem 5-3A Computing merchandising amounts and formatting income statements LO C2, P4 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 Debit $ 34,500 138,000 $39.84R 115,114 8,000 235,980 Merchandise inventory (ending) Other (noninventory) assets Total liabilities K. Valley, Capital K. Valley, Withdrawals Sales Sales discounts Sales returns and allowances Cost of goods sold Sales salaries expense Rent expense-Selling space Store supplies expense Advertising expense Office salaries expense Rent expense-Office space Office supplies expense Totals 3.610 15,575 91,673 32,329 11.091 2,832 20,058 29,498 2,832 390.942 Beginning merchandise inventory was $27,842. 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 $101,430 2,130 4,869 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 general and administrative expenses. 4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.

Answer 1

Valley Company Requirement 1 Net Sales Sales Less:Sales Discount Less:Sales Returns and Allowances Net Sales 235980 -3610 - 15575 216795 Requirement 2 Cost of Merchandise purchased Invoice cost of merchandise Purchase Discounts received Purchase Returns and Allowances Cost of Transportation - in Total Cost of merchandise 101430 -2130 -4869 3900 98331 Requirement 3 Income Statement - Multiple Step For the Year ended Aug ,31 Sales 235980 3610 15575 19185 216795 91673 125122 Less:Sales Discount Less: Sales Returns and Allowances Net Sales Cost of goods sold Gross Profit Expense Selling Expenses: Sales Salaries Expense Rent Expense - selling Store supplies expense Advertising expense Total Selling expense General Administrative Expense Office Salaries Expense Rent Expense - Office Space Office Supplies Expense Total General Administrative Expense Total Expenses Net Income 32329 11091 2832 20058 66310 29498 2832 944 33274 99584 25538 Requirement 4 216795 Income Statement - Single Step For the Year ended Aug ,31 Net Sales Expense Cost of goods sold Selling Expenses General Administrative Expense Net Income 91673 66310 33274 191257 25538