Reference no: EM132325752

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.

Debit Credit

Merchandise inventory (ending) $40,500

Other (noninventory) assets 162,000

Total liabilities $46,778

K. Valley, Capital 133,065

K. Valley, Withdrawals 8,000

Sales 277,020

Sales discounts 4,238

Sales returns and allowances 18,283

Cost of goods sold 106,939

Sales salaries expense 37,952

Rent expense-Selling space 13,020

Store supplies expense 3,324

Advertising expense 23,547

Office salaries expense 34,628

Rent expense-Office space 3,324

Office supplies expense 1,108

Totals $456,863 $456,863

Beginning merchandise inventory was $32,684. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs.

Invoice cost of merchandise purchases $119,070

Purchases discounts received 2,500

Purchases returns and allowances 5,715

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 multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.

4. Prepare single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.