Question

This is all one question. Just requires information.

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.

		Debit			Credit
Merchandise inventory (ending)		$	35,500
Other (noninventory) assets			142,000
Total liabilities					$	41,003
Common stock						47,787
Retained earnings						70,319
Dividends			8,000
Sales						242,820
Sales discounts			3,715
Sales returns and allowances			16,026
Cost of goods sold			94,217
Sales salaries expense			33,266
Rent expense—Selling space			11,413
Store supplies expense			2,914
Advertising expense			20,640
Office salaries expense			30,353
Rent expense—Office space			2,914
Office supplies expense			971
Totals		$	401,929		$	401,929

Beginning merchandise inventory was $28,649. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs.

Invoice cost of merchandise purchases	$	104,370
Purchases discounts received		2,192
Purchases returns and allowances		5,010
Costs of transportation-in		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.

It asks me to compute net sales and gives a net sales chart with 4 rows. first row is sales last is net sales.

Answer 1

1
Sales	242820
Less: Sales discounts	(3715)
Less: Sales returns and allowances	(16026)
Net sales	223079
2
Cost of Merchandise Purchased
Invoice cost of merchandise purchased	104370
Purchase discounts received	(2192)
Purchase returns and allowances	(5010)
Costs of transportation-in	3900
Total cost of merchandise purchased	101068
3
VALLEY COMPANY
Income Statement
For Year Ended August 31
Sales		242,820
Less: Sales discounts	3,715
Less: Sales returns and allowances	16,026	19741
Net sales		223,079
Cost of goods sold		94,217
Gross profit		128,862
Expense
Selling expenses
Sales salaries expense	33,266
Rent expense - Selling space	11,413
Store supplies expense	2,914
Advertising expense	20,640
Total selling expenses		68,233
General and administrative expenses
Office salaries expense	30,353
Rent expense - Office space	2,914
Office supplies expense	971
Total general and administrative expenses		34,238
Total expenses		102,471
Net income		26,391
4
VALLEY COMPANY
Income Statement
For Year Ended August 31
Net sales		223,079
Expenses
Cost of goods sold	94,217
Selling expenses	68,233
General and administrative expenses	34,238
Total expenses		196,688
Net income		26,391
Note: Amounts in 1 and 2 can alternatively be written without parenthesis