Accounting Questions

Valley Company’s adjusted trial balance on August 31, 2015, its fiscal year-end, follows.

Debit

Credit

  Merchandise inventory

$

36,000

  Other (noninventory) assets

144,000

  Total liabilities

$

41,580

  Common stock

48,460

  Retained earnings

71,141

  Dividends

8,000

  Sales

246,240

  Sales discounts

3,767

  Sales returns and allowances

16,252

  Cost of goods sold

95,489

  Sales salaries expense

33,735

  Rent expense—Selling space

11,573

  Store supplies expense

2,955

  Advertising expense

20,930

  Office salaries expense

30,780

  Rent expense—Office space

2,955

  Office supplies expense 

985

  Totals

$

407,421

$

407,421

On August 31, 2014, merchandise inventory was $29,052. Supplementary records of merchandising activities for the year ended August 31, 2015, reveal the following itemized costs.

  Invoice cost of merchandise purchases

$

105,840  

  Purchase discounts received

2,223  

  Purchase returns and allowances

5,080  

  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 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.