Problem 5-3A Computing merchandising amounts and formatting income statements LO C2, P4

Valley Companys adjusted trial balance on August 31, 2017, its fiscal year-end, follows.

On August 31, 2016, merchandise inventory was $36,315. Supplementary records of merchandising activities for the year ended August 31, 2017, reveal the following itemized costs.

Required:

1. Compute the companys net sales for the year. 2. Compute the companys 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.

Debit $ 45,000 180,000 Credit Merchandise inventory Other (noninventory) assets Total liabilities K. Valley, Capital 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 Office salaries expense Rent expense-Office space Office supplies expense Totals $ 51,975 146,529 8,000 307,800 4,709 20,315 118,387 42,169 14,467 3,694 26,163 38,475 3,694 1,231 $506,304 $506,304