Question

Valley Company’s adjusted trial balance on August 31, 2016, its fiscal year-end, follows. Debit Credit Merchandise inventory $ 37,000 Other (noninventory) assets 148,000 Total liabilities $ 42,735 Common stock 49,806 Retained earnings 72,788 Dividends 8,000 Sales 253,080 Sales discounts 3,872 Sales returns and allowances 16,703 Cost of goods sold 98,034 Sales salaries expense 34,672 Rent expense—Selling space 11,895 Store supplies expense 3,037 Advertising expense 21,512 Office salaries expense 31,635 Rent expense—Office space 3,037 Office supplies expense 1,012 Totals $ 418,409 $ 418,409 On August 31, 2015, merchandise inventory was $29,859. Supplementary records of merchandising activities for the year ended August 31, 2016, reveal the following itemized costs. Invoice cost of merchandise purchases $ 108,780 Purchase discounts received 2,284 Purchase returns and allowances 5,221 Costs of transportation-in 3,900 1. Prepare a multiple-step income statement that begins with net sales and includes separate categories for: cost of goods sold, selling expenses, and general and administrative expenses. 2. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.

Answer 1