BizKid Co mpany%u2019s adjusted trial balance on August 31, 2005, its fiscal yea
ID: 2375634 • Letter: B
Question
BizKid Company%u2019s adjusted trial balance on August 31, 2005, its fiscal year-end, follows:
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%u2014Selling space . . . . . . . 10,000
Store supplies expense . . . . . . . . . . . . 2,500
Advertising expense . . . . . . . . . . . . . . 18,000
Office salaries expense . . . . . . . . . . . . 26,500
Rent expense%u2014Office 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%u2019s net sales for the year.
2. Compute the company%u2019s 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.
Explanation / Answer
1. Compute the company%u2019s net sales for the year.
(Gross) sales 212,000
less:
Sales discounts (3,250)
Sales returns & allowances (14,000)
Net sales for the year $194,750
2. Compute the company%u2019s total cost of merchandise purchased for the year
Cost of merchandise purchases 91,000
less:
Purchase discounts received (1,900)
Purchase returns & allowances (4,400)
add:
Costs of transportation-in 3,900
Total cost of merch. purchased 88,600
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.