# Problem 5-4A Computing merchandising amounts and formatting income statements LO C2, P4 [The followi

Problem 5-4A Computing merchandising amounts and formatting income statements LO C2, P4

[The following information applies to the questions displayed below]

Valley Company’s adjusted trial balance on August 31, 2013, its fiscal year-end, followsDebitCredit Merchandise inventory\$34,500 Other (noninventory) assets138,000 Total liabilities\$39,848 K Valley, Capital115,114 K Valley, Withdrawals8,000 Sales235,980 Sales discounts3,610 Sales returns and allowances15,575 Cost of goods sold91,673 Sales salaries expense32,329 Rent expenseâ€”Selling space11,091 Store supplies expense2,832 Advertising expense20,058 Office salaries expense29,498 Rent expenseâ€”Office space2,832 Office supplies expense944 Totals\$390,942\$390,942On August 31, 2012, merchandise inventory was \$27,842 Supplementary records of merchandising activities for the year ended August 31, 2013, reveal the following itemized costs

Invoice cost of merchandise purchases\$101,430 Purchase discounts received2,130 Purchase returns and allowances4,869 Costs of transportation-in3,900References

Section BreakProblem 5-4A Computing merchandising amounts and formatting income statements LO C2, P4

4

Required:1Compute the company’s net sales for the year

WorksheetDifficulty: MediumLearning Objective: 05-P4 Define and prepare multiple-step and single-step income statements

Problem 5-4A Part 1Learning Objective: 05-C2 Identify and explain the inventory asset and cost flows of a merchandising company

Problem 5-4A Part 2

2Compute the company’s total cost of merchandise purchased for the year

05-P4 Define and prepare multiple-step and single-step income statements

Problem 5-4A Part 2Learning Objective: 05-C2 Identify and explain the inventory asset and cost flows of a merchandising company

Problem 5-4A Part 3

3Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses

WorksheetDifficulty: MediumLearning Objective: 05-P4 Define and prepare multiple-step and single-step income statements

Problem 5-4A Part 3Learning Objective: 05-C2 Identify and explain the inventory asset and cost flows of a merchandising company

Problem 5-4A Part 4

4Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses