Problem: Valley Company's adjusted trial balance on August 31, 2015, its fiscal year-end, follows.
|
|
Debit
|
Credit
|
|
Merchandise Inventory
|
$40,000
|
|
|
Other (non inventory) assets
|
160,000
|
|
|
Total liabilities
|
|
$46,200
|
|
Common Stock
|
|
53,844
|
|
Retained earnings
|
|
77,723
|
|
Dividends
|
8,000
|
|
|
Sales
|
|
273,600
|
|
Sales discount
|
4,186
|
|
|
Sales returns and allowances
|
18,058
|
|
|
Cost of goods sold
|
105,665
|
|
|
Sales salaries expense
|
37,483
|
|
|
Rent expense-selling space
|
12,859
|
|
|
Store supplies expense
|
3,283
|
|
|
Advertising expense
|
23,256
|
|
|
Office salaries expense
|
34,200
|
|
|
Rent expense-Office space
|
3,283
|
|
|
Office supplies expense
|
1,094
|
|
|
Totals
|
$451,367
|
$451,367
|
On August 31, 2014, merchandise inventory was $32,280. Supplementary records of merchandising activities for the year ended August 31, 2015, reveal the following itemized costs.
|
Invoice cost of merchandise purchases
|
$117,600
|
|
Purchase discount received
|
2,470
|
|
Purchase returns and allowances
|
5,645
|
|
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.