[The following information app
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Required information
[The following information applies to the questions displayed below.]
Valley Company's adjusted account balances from its general ledger 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, and advertising expense. It categorizes the remaining expenses as general and administrative.
Credit
3:21
Adjusted Account Balances
Merchandise inventory (ending)
Other (non-inventory) assets
Total liabilities
2
Common stock
Retained earnings
Dividends
Sales
Sales discounts
Sales returns and allowances
Cost of goods sold
Sales salaries expense
Rent expense-Selling space
Store supplies expense
Advertising expense
Office salaries expense
Rent expense-Office space
Office supplies expense
Totals
Invoice cost of merchandise purchases
Purchases discounts received
Purchases returns and allowances
Costs of transportation-in
F2
Beginning merchandise inventory was $33,894. Supplementary records of merchandising activities for the year ended
August 31 reveal the following itemized costs.
#3
80
F3
Debit
$ 42,000
168,000
$
4
8,000
4,395
18,960
110,754
39,357
Required:
Prepare closing entries as of August 31 (the perpetual inventory system is used).
888
F4
13,502
3,447
24,419
35,910
3,447
1,149
$ 473,340 $ 473,340
$ 48,510
81,013
56,537
287,280
$ 123,480
2,593
5,927
3,900
%
5
< Prev
A
F5
MacBook Air
< 6
B
4 of 6
A
F6
&
Next >
8
7
F7
* CO
DIL
8
FB](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6bfe29d4-782f-428b-937b-485b5d1c1aec%2F3b15a3ed-b03d-4ed9-8dcf-07789759cecd%2Fzw1hlzo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Valley Company's adjusted account balances from its general ledger 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, and advertising expense. It categorizes the remaining expenses as general and administrative.
Credit
3:21
Adjusted Account Balances
Merchandise inventory (ending)
Other (non-inventory) assets
Total liabilities
2
Common stock
Retained earnings
Dividends
Sales
Sales discounts
Sales returns and allowances
Cost of goods sold
Sales salaries expense
Rent expense-Selling space
Store supplies expense
Advertising expense
Office salaries expense
Rent expense-Office space
Office supplies expense
Totals
Invoice cost of merchandise purchases
Purchases discounts received
Purchases returns and allowances
Costs of transportation-in
F2
Beginning merchandise inventory was $33,894. Supplementary records of merchandising activities for the year ended
August 31 reveal the following itemized costs.
#3
80
F3
Debit
$ 42,000
168,000
$
4
8,000
4,395
18,960
110,754
39,357
Required:
Prepare closing entries as of August 31 (the perpetual inventory system is used).
888
F4
13,502
3,447
24,419
35,910
3,447
1,149
$ 473,340 $ 473,340
$ 48,510
81,013
56,537
287,280
$ 123,480
2,593
5,927
3,900
%
5
< Prev
A
F5
MacBook Air
< 6
B
4 of 6
A
F6
&
Next >
8
7
F7
* CO
DIL
8
FB
Expert Solution

Step 1
1.
Sales | $287,280 |
Less: Sales discounts | (4,395) |
Less: Sales returns and allowances | (18,960) |
Net sales | $263,925 |
2.
Invoice cost of merchandise inventory | $123,480 |
Less: Purchase discounts | (2,593) |
Less: Purchase returns and allowances | (5,927) |
Add: Cost of transportation in | 3,900 |
Cost of merchandise purchased | $118,860 |
3.
VALLEY COMPANY Income Statement For The Year Ended August 31, 2017
|
||
Sales | $287,280 | |
Less: Sales discounts | 4,395 | |
Less: Sales returns and allowances | 18,960 | |
23,355 | ||
Net sales | 263,925 | |
Cost of goods sold | 110,754 | |
Gross profit | 153,171 | |
Selling expense: | ||
Salaries expense | 39,357 | |
Rent expense-selling space | 13,502 | |
Store supplies expense | 3,447 | |
Advertising expense | 24,419 | |
Total selling expenses | 80,725 | |
General and administrative expenses: | ||
Office salaries expense | 35,910 | |
Rent expense-office space | 3,447 | |
Office supplies expense | 1,149 | |
Total general and administrative expenses | 40,506 | |
Net income | $31940 |
Step by step
Solved in 2 steps

Recommended textbooks for you


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON

Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education

Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education