2.Compute the total cost of merchandise purchased for the year. 3. Prepare a mul

Question

2.Compute the total cost of merchandise purchased for the year. 3. Prepare a multi-step income statement that includes separate categories for selling expenses and for general administrative expenses 4. Prepare a single step income statement that includes these expenses categories: cost of goods sold,selling expense and general and administrative expenses. [The following information applies to the questions displayed below Valley Company's adjusted trial balance on August 31, 2015, its fiscal year-end, follows. eblt Credit Merchandise Inventory Other (noninventory) assets Total Ilabilities Common stock Retained earnings Dividends Sales Sales discounts Sales returns and allowances Cost of goods sold Sales salaries expense Rent expense-Selling space Store supplies expense Advertising expense Office salaries expense Rent expense-Office space Office supplies expense $ 42,500 170,000 $ 49,088 57,210 81,838 8,000 290,700 4.448 19,186 112,026 39,826 13,663 3,488 24,710 36,338 3,488 1,163 Totals $478836 $478.836

Explanation / Answer

1 Net sales $267,066 2 Cost of merchandise purchased Invoice cost of merchandise purchased 124950 Less:Purchase discounts received -2624 Less:Purchase returns and allowances -5998 Add:Cost of transportation 3900 Cost of merchandise purchased 120228 3 VALLEY COMPANY Income Statement For Year Ended August 31, 2015 Sales $290,700 Less: Sales discounts $4,448 Less: Sales returns and allowances 19,186 23634 Net sales $267,066 Cost of goods sold 112,026 Gross profit $155,040 Expense Selling expenses Sales salaries expense 39,826 Rent expense—Selling space 13,663 Store supplies expense 3,488 Advertising expense 24,710 Total selling expenses 81687 General and administrative expenses Office salaries expense 36,338 Rent expense—Office space 3,488 Office supplies expense 1163 Total general and administrative expenses 40989 Total expenses 122676 Net income $32,364 4 VALLEY COMPANY Income Statement For Year Ended August 31, 2015 Net sales $267,066 Expenses Cost of goods sold $112,026 Selling expenses 81,687 General and administrative expenses 40,989 Total expenses 234702 Net income $32,364

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