Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows.

Debit Credit
Merchandise inventory $ 41,000
Other (noninventory) assets 130,400
Total liabilities $ 25,000
K. Valley, Capital 104,550
K. Valley, Withdrawals 8,000
Sales 225,600
Sales discounts 2,250
Sales returns and allowances 12,000
Cost of goods sold 74,500
Sales salaries expense 32,000
Rent expense—Selling space 8,000
Store supplies expense 1,500
Advertising expense 13,000
Office salaries expense 28,500
Rent expense—Office space 3,600
Office supplies expense 400
Totals $ 355,150 $ 355,150

On August 31, 2016, merchandise inventory was $25,400. Supplementary records of merchandising activities for the year ended August 31, 2017, reveal the following itemized costs.

Invoice cost of merchandise purchases $ 92,000
Purchases discounts received 2,000
Purchases returns and allowances 4,500
Costs of transportation-in 4,600

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.

Question

01-02-2020
Business

contestada

Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows.

Debit Credit
Merchandise inventory $ 41,000
Other (noninventory) assets 130,400
Total liabilities $ 25,000
K. Valley, Capital 104,550
K. Valley, Withdrawals 8,000
Sales 225,600
Sales discounts 2,250
Sales returns and allowances 12,000
Cost of goods sold 74,500
Sales salaries expense 32,000
Rent expense—Selling space 8,000
Store supplies expense 1,500
Advertising expense 13,000
Office salaries expense 28,500
Rent expense—Office space 3,600
Office supplies expense 400
Totals $ 355,150 $ 355,150

On August 31, 2016, merchandise inventory was $25,400. Supplementary records of merchandising activities for the year ended August 31, 2017, reveal the following itemized costs.

Invoice cost of merchandise purchases $ 92,000
Purchases discounts received 2,000
Purchases returns and allowances 4,500
Costs of transportation-in 4,600

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.

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Adedokuntunde6 Adedokuntunde6 · Answer 1 · 2020-02-01T15:38:36+01:00

Answer: (1) The net sales is $243,600, (2) The total cost of merchandise purchase during the year is $92,100, (3) The multiple step income statement operating income is $182,100, (4) The single step income statement Net income is $82,100

Explanation:

To compute the Net Sales for the year

$

Sales. 255,600

Less sales return. 12,000

--------------

Net Sales. 243,600

----------------

To compute the total cost of merchandise purchase during the year

$

Invoice cost of merchandise 92,000

Add: Transportation -in. 4,600

----------

96,600

Less: Purchase Return. 4,500

-------------

Net purchase 92,100

----------------

Multiple step income statement

$

Net Sales. 243,600

Less: Cost of good sold. 74,500

-----------------------

Gross Profit. 169,100

Operating Expenses

Sales salaries expense 32,000

Rent expense- selling space 8,000

Store supplies expense 1,500

Advertising expenses. 13,000

Office salaries expense 28,500

Rent expense -office space 3,600

Office supplies expense. 400

--------------

Total operating expense. 87,000

-----------------

Operating income. 82,100

------------------

Single step income statements

$

Revenue

Sales Revenue. 243,600

Expenses

Cost of good sold 74,500

Sales salaries expense 32,000

Rent expense -selling space 8,000

Store supplies expense 1,500

Advertising expenses 13,000

Office salaries expenses 28,500

Rent expense -office space 3,600

Office supplies expense 400

------------------

161,500

-------------

Net income. 82,100

----------------

swatiupadhyay714 swatiupadhyay714 · Answer 2 · 2021-12-10T18:25:39+01:00

An adjusted trial balance is a list of all banks' ledger accounts after adjusting entries have been made.

The adjusting entries are displayed in a different column, but in aggregate for each account; as a result, it may be difficult to tell which precise journal entries have an influence on each account.

(1) The net sales are $243,600

(2) The total cost of merchandise purchase during the year is $92,100

(3) The multiple-step income statement operating income is $182,100

(4) The single-step income statement Net income is $82,100

Calculation of Net Sales for the year:

Sales. 255,600

Less: sales return. 12,000

Net Sales= $243,600

Calculation of total cost of merchandise purchase during the year:

Invoice cost of merchandise 92,000

Add: Transportation -in. 4,600

Less: Purchase Return. 4,500

Net purchase = $92,100

Multiple-step income statement

Net Sales. 243,600

Less: Cost of goods sold. 74,500

Gross Profit= $169,100

Operating Expenses

Sales salaries expense 32,000

Rent expense- selling space 8,000

Store supplies expense 1,500

Advertising expenses. 13,000

Office salaries expense 28,500

Rent expense -office space 3,600

Office supplies expense. 400

Total operating expense = 87,000

Operating income = 82,100

Single-step income statements

Revenue

Sales Revenue. 243,600

Expenses

Cost of goods sold 74,500

Sales salaries expense 32,000

Rent expense -selling space 8,000

Store supplies expense 1,500

Advertising expenses 13,000

Office salaries expense 28,500

Rent expense -office space 3,600

Office supplies expense 400

Net income = 82,100

To know more about the calculation of the income statement and the inventory, refer to the link below:

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