Reference no: EM13332690
Debit Credit
Merchandise inventory . . . . . . . . . . . . $ 31,000
Other (noninventory) assets . . . . . . . . 120,400
Total liabilities . . . . . . . . . . . . . . . . . . $ 35,000
N. Kidman, Capital . . . . . . . . . . . . . . . $ 101,650
N. Kidman, Withdrawals . . . . . . . . . . . 8,000
Sales . . . . . . . . . . . . . . . . . . . . . . . . . $ 212,000
Sales discounts . . . . . . . . . . . . . . . . . 3,250
Sales returns and allowances . . . . . . . 14,000
Cost of goods sold . . . . . . . . . . . . . . 82,600
Sales salaries expense . . . . . . . . . . . . 29,000
Rent expense—Selling space . . . . . . . 10,000
Store supplies expense . . . . . . . . . . . . 2,500
Advertising expense . . . . . . . . . . . . . . 18,000
Office salaries expense . . . . . . . . . . . . 26,500
Rent expense—Office space . . . . . . . 2,600
Office supplies expense . . . . . . . . . . . 800
Totals . . . . . . . . . . . . . . . . . . . . . . . . $348,650 $348,650
On August 31, 2004, merchandise inventory was $25,000. Supplementary records of merchandising
activities for the year ended August 31, 2005, reveal the following itemized costs:
Invoice cost of merchandise purchases . . . . . . . $91,000
Purchase discounts received . . . . . . . . . . . . . . . 1,900
Purchase returns and allowances . . . . . . . . . . . . 4,400
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 selling expenses and for 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.