In: Accounting
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, advertising expense. It categorizes the remaining expenses as general and administrative.
Answer -
1. Answer -
Net Sales | |
Sales | $263,340 |
Less: Sales discounts | $4,029 |
Less: Sales returns and allowances | $17,380 |
Net sales | $241,931 |
Calculation:
Net sales:
= Sales - Sales discounts - Sales returns and allowances
= $263,340 - $4,029 - $17,380
= $241,931
2. Answer -
Cost of Merchandise Purchased | |
Invoice cost of merchandise purchased | $113,190 |
Purchase discounts received | ($2,377) |
Purchase returns and allowances | ($5,433) |
Costs of transportation-in | $3,900 |
Total cost of merchandise purchased | $109,280 |
Calculation:
Total cost of merchandise purchased:
= Invoice cost of merchandise purchased - Purchase discounts received - Purchase returns and allowances + Costs of transportation-in
= $113,190 - $2,377 - $5,433 + $3,900
= $109,280
3. Answer -
Valley Company | ||
Income Statement | ||
For Year Ended August 31 | ||
Sales | $263,340 | |
Less: Sales discounts | $4,029 | |
Less: Sales returns and allowances | $17,380 | $21,409 |
Net sales | $241,931 | |
Cost of goods sold | $101,850 | |
Gross profit | $140,081 | |
Expense: | ||
Selling expenses: | ||
Sales salaries expense | $36,078 | |
Rent expense-selling space | $12,377 | |
Store supplies expense | $3,160 | |
Advertising expense | $22,384 | |
Total selling expenses | $73,999 | |
General and administrative expenses: | ||
Office salaries expense | $32,918 | |
Rent expense-office space | $3,160 | |
Office supplies expense | $1,053 | |
Total general and administrative expenses | $37,131 | |
Total expenses | $111,130 | |
Net income | $28,951 |
Calculation:
Net sales:
= Sales - Sales discounts - Sales returns and allowances
= $263,340 - $4,029 - $17,380
= $241,931
Gross profit:
= Net sales - Cost of goods sold
= $241,931 - $101,850
= $140,081
Total selling expenses:
= Sales salaries expense + Rent expense-selling space + Store supplies expense + Advertising expense
= $36,078 + $12,377 + $3,160 + $22,384
= $73,999
Total general and administrative expenses:
= Office salaries expense + Rent expense-office space + Office supplies expense
= $32,918 + $3,160 + $1,053
= $37,131
Total expenses:
= Total selling expenses + Total general and administrative expenses
= $73,999 + $37,131
= $111,130
Net income:
= Gross profit - Total expenses
= $140,081 - $111,130
= $28,951
4. Answer -
Valley Company | ||
Income Statement | ||
For Year Ended August 31 | ||
Net sales | $241,931 | |
Expenses: | ||
Cost of goods sold | $101,850 | |
Selling expenses | $73,999 | |
General and administrative expenses | $37,131 | |
Total expenses | $212,980 | |
Net income | $28,951 |
Calculation:
Net sales:
= Sales - Sales discounts - Sales returns and allowances
= $263,340 - $4,029 - $17,380
= $241,931
Selling expenses:
= Sales salaries expense + Rent expense-selling space + Store supplies expense + Advertising expense
= $36,078 + $12,377 + $3,160 + $22,384
= $73,999
General and administrative expenses:
= Office salaries expense + Rent expense-office space + Office supplies expense
= $32,918 + $3,160 + $1,053
= $37,131
Total expenses:
= Cost of goods sold + Selling expenses + General and administrative expenses
= $101,850 + $73,999 + $37,131
= $212,980
Net income:
= Net sales - Total expenses
= $241,931 - $212,980
= $28,951