Problem 5-3A Computing merchandising amounts and formatting income statements LO C2, P4 Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows.
On August 31, 2016, merchandise inventory was $25,400. Supplementary records of merchandising activities for the year ended August 31, 2017, reveal the following itemized costs.
1. Prepare closing entries as of August 31, 2017 (the perpetual inventory system is used).
2. Compute the company’s net sales for the year.
3. Compute the company’s total cost of merchandise purchased for the year.
4. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.
5. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.
Debit $ 41,000 130,400 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 spacee Store supplies expensee Advertising expense Office salaries expense Rent expense-Office space Office supplies expense Totals $ 25,000 104,550 8,000 225,600 2,250 12,000 74,500 32,000 8,000 1,500 13,000 28,500 3,600 400 $355,150 $355,150