Reference no: EM132441501
Assignment Instructions
This assessment addresses the following course objective(s):
• Record various business transactions in accordance with generally accepted accounting principles.
• Analyze the basic financial statements
In this assignment, we will learn that there are two methods in preparing an income statement, the single-step and multi-step, both use the same number and render the same results.
Question:
Concord 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) |
44,000 |
|
| Other (noninventory) assets |
176,000 |
|
| Total liabilities |
|
50,820 |
| K. Concord, Capital |
|
143,537 |
| K. Concord, Withdrawals |
8,000 |
|
| Sales |
|
|
300,960 |
| Sales discounts |
4,605 |
|
| Sales returns and allowances |
19,863 |
|
| Cost of goods sold |
115,842 |
|
| Sales salaries expense |
41,232 |
|
| Rent expense-Selling space |
14,145 |
|
| Store supplies expense |
3,612 |
|
| Advertising expense |
25,582 |
|
| Office salaries expense |
37,620 |
|
| Rent expense-Office space |
3,612 |
|
| Office supplies expense |
1,204 |
|
| Totals |
|
495,317 |
495,317 |
Beginning merchandise inventory was $35,508. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs.
| Invoice cost of merchandise purchases |
129,360 |
| Purchases discounts received |
2,717 |
| Purchases returns and allowances |
6,209 |
| 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.