Reference no: EM133561002
Valley Company's adjusted account balances from its general ledger 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.
| Adjusted Account Balances |
Debit |
Credit |
| Merchandise inventory (ending) |
$ 38,500 |
|
| Other (non-inventory) assets |
154,000 |
|
| Total liabilities |
|
$ 44,468 |
| Common stock |
|
75,256 |
| Retained earnings |
|
51,825 |
| Dividends |
8,000 |
|
| Sales |
|
263,340 |
| Sales discounts |
4,029 |
|
| Sales returns and allowances |
17,380 |
|
| Cost of goods sold |
101,850 |
|
| Sales salaries expense |
36,078 |
|
| Rent expense-Selling space |
12,377 |
|
| Store supplies expense |
3,160 |
|
| Advertising expense |
22,384 |
|
| Office salaries expense |
32,918 |
|
| Rent expense-Office space |
3,160 |
|
| Office supplies expense |
1,053 |
|
| Totals |
$ 434,889 |
$ 434,889 |
The beginning merchandise inventory was $31,070. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs.
| Invoice cost of merchandise purchases |
$ 113,190 |
| Purchases discounts received |
2,377 |
| Purchases returns and allowances |
5,433 |
| Costs of transportation-in |
3,900 |
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.