Question

In: Accounting

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

 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.


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

Compute the companys net sales for the year. Net Sales Sales Net sales

Compute the companys total cost of merchandise purchas Cost of Merchandise Purchased Invoice cost of merchandise purchased P

Income Statement For Year Ended August 31 0 0 0 Expense Selling expenses Total selling expenses General and administrative ex

VALLEY COMPANY Income Statement For Year Ended August 31 Expenses Total expenses 0


Solutions

Expert Solution

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


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