Valley Company’s adjusted trial balance on August 31, its fiscal year-end, follows. It categorizes the following accounts as selling

Valley Company’s adjusted trial balance on August 31, its fiscal year-end, follows. It categorizes the following accounts as selling expenses: sales salaries expense, rent expense—selling space, store supplies expense, and advertising expense. It categorizes the remaining expenses as general and administrative.

Debit Credit Merchandise inventory (ending) $43,500 Other (noninventory) assets 174,000 Total liabilities $50,243 Common stock 58,556 Retained earnings 83,482 Dividends 8,000 Sales 297,540 Sales discounts 4,552 Sales returns and allowances 19,638 Cost of goods sold 114,570 Sales salaries expense 40,763 Rent expense—Selling space 13,984 Store supplies expense 3,570 Advertising expense 25,291 Office salaries expense 37,193 Rent expense—Office space 3,570 Office supplies expense 1,190 Totals $ 489,821 $489,821 Beginning merchandise inventory was $35,105. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs. Invoice cost of merchandise purchases $127,890 Purchases discounts received 2,686 Purchases returns and allowances 6,139 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 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.

Answers

1.  Net sales = $273,350

2. Total cost of merchandise purchased = $122,965

3. Gross profit = $158,780; and Net Income = $33,219

4. Net Income = $33,219

Explanation:

Note: The data in the question are merged. They are therefore sorted before answering the question. See the attached pdf file for the sorted question.

The explantion to the answers are now provided as follows:

1. Compute the company’s net sales for the year.

Note: See the attached excel file for the net sales computation.

2. Compute the company’s total cost of merchandise purchased for the year.

Note: See the attached excel file for total cost of merchandise purchased computation.

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.

Note: See the attached excel file the multiple-step income statement.

A multi-step income statement is a detailed income statement that presents net sales, cost of goods sold, gross profit, expenses and overall net profit or loss of a company for a particular accounting period.

4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.

Note: See the attached excel file the single-step income statement.

A single step income statement is a less detailed income statement that only present all expenses including cost of goods sold in one column without breaking down expenses into categories of net sales, cost of goods sold, gross profit, expenses and overall net profit or loss of a company for a particular accounting period.

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.

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