Valley Company’s adjusted trial balance on August 31, its fiscal year-end, follows. It categorizes the following accounts as sel

Question

2 years ago

8

Valley Company’s adjusted trial balance on August 31, its fiscal year-end, follows. It categorizes the following accounts as sel

ling 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) $43,500
Other (noninventory) assets 174,000
Total liabilities $50,243
Common stock 58,556
Retained earnings 83,482
Dividends 8,000
Sales 297,540
Sales discounts 4,552
Sales returns and allowances 19,638
Cost of goods sold 114,570
Sales salaries expense 40,763
Rent expense—Selling space 13,984
Store supplies expense 3,570
Advertising expense 25,291
Office salaries expense 37,193
Rent expense—Office space 3,570
Office supplies expense 1,190
Totals $ 489,821 $489,821
Beginning merchandise inventory was $35,105. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs.
Invoice cost of merchandise purchases $127,890
Purchases discounts received 2,686
Purchases returns and allowances 6,139
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.

Business

1 answer:

Nesterboy [21] · Answer 1 · 2023-03-12T00:32:18+03:00

Answer:

1. Net sales = $273,350

2. Total cost of merchandise purchased = $122,965

3. Gross profit = $158,780; and Net Income = $33,219

4. Net Income = $33,219

Explanation:

Note: The data in the question are merged. They are therefore sorted before answering the question. See the attached pdf file for the sorted question.

The explantion to the answers are now provided as follows:

1. Compute the company’s net sales for the year.

Note: See the attached excel file for the net sales computation.

2. Compute the company’s total cost of merchandise purchased for the year.

Note: See the attached excel file for total cost of merchandise purchased computation.

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.

Note: See the attached excel file the multiple-step income statement.

A multi-step income statement is a detailed income statement that presents net sales, cost of goods sold, gross profit, expenses and overall net profit or loss of a company for a particular accounting period.

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

Note: See the attached excel file the single-step income statement.

A single step income statement is a less detailed income statement that only present all expenses including cost of goods sold in one column without breaking down expenses into categories of net sales, cost of goods sold, gross profit, expenses and overall net profit or loss of a company for a particular accounting period.

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