18 Paid the amount ld merchandise to Tux Co. for $4,800 under cre voice Aug. 18,

Question

18 Paid the amount ld merchandise to Tux Co. for $4,800 under cre voice Aug. 18, C h, from August 12. dated August 19. The merchandise had cost $2,400. quested a price reduction on the August 19 sale because the mer $4,950 19 So merchandise did no appr allov How toward the $4,800 invoice t specifications. Lowe's sent Tux a $500 credit memorandum solve the issue toward t 22 Tux reque ount due from the August 19 sale less the price 29 Received Tux's cash payment for the am 30 Paid Aron Company the amount due from the August Aug. 29, Dr Cash, $4.300 ance from August 22. e fol n Company the amount due from the August I purchase. Problem 5-3A Computing merchandising amounts and formatting income statements C2 P4 Valley Company's adjusted trial balance on August 31, 2017, its fiscal year-end, follows Debit Credit $ 41,000 130,400 Merchandise inventory 4 Other (noninventory) assets $ 25,000 104,550 Total liabilities K. Valley, Capital. 8,000 K. Valley, Withdrawals Sales Sales discounts Sales returns and allowances Cost of goods sold Sales salaries expense Rent expense-Selling space Store supplies expense Advertising expense 225,600 2,250 12,000 74,500 32,000 8,000 1,500 13,000 28,500 3,600 400 Office salaries expense- Rent expense-Office space . . . Office supplies expense Totals 5355,150 $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.

Explanation / Answer

1. Net sales=sales-sales discounts-sales returns

=$225,600-$2250-$12,000

=$211,350

2.

Total cost of merchandise purchased=invoice cost-purchase discount-purchase returns+ cost of transportation in

=$92,000-$2,000-$4500+$4600

=$90,100

3. Multiple income statement:

4.

Single step income statement:

Sales $225,600 Less: sales discount $2,250 Less: sales returns and allowance $12,000 $14,250 Net sales $211,350 Cost of good sold $74,500 Gross profit $136,850 Expenses: Selling expenses: Sales salaries expense $32,000 Rent expense-selling space $8,000 Stores supplies expense $1,500 Advertising expense $13,000 Total selling expenses $54,500 General and administrative expenses: Office salaries expense $28,500 Rent expense-office space $3,600 Office supplies expense $400 Total general and administrative expenses $32,500 Total expenses $87,000 Net income $49,850

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