Valley Company’s adjusted trial balance on August 31, 2015, its fiscal year-end, follows. Debit Credit Merchandise inventory $ 38,000 Other (noninventory) assets 152,000 Total liabilities $ 43,890 K. Valley, Capital 125,585 K. Valley, Withdrawals 8,000 Sales 259,920 Sales discounts 3,977 Sales returns and allowances 17,155 Cost of goods sold 100,577 Sales salaries expense 35,609 Rent expense—Selling space 12,216 Store supplies expense 3,119 Advertising expense 22,093 Office salaries expense 32,490 Rent expense—Office space 3,119 Office supplies expense 1,040 Totals $ 429,395 $ 429,395 On August 31, 2014, merchandise inventory was $30,666. Supplementary records of merchandising activities for the year ended August 31, 2015, reveal the following itemized costs. Invoice cost of merchandise purchases $ 111,720 Purchase discounts received 2,346 Purchase returns and allowances 5,363 Costs of transportation-in 3,900 Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Valley Company’s adjusted trial balance on August 31, 2015, its fiscal year-end, follows.

		Debit		Credit
Merchandise inventory	$	38,000
Other (noninventory) assets		152,000
Total liabilities			$	43,890
K. Valley, Capital				125,585
K. Valley, Withdrawals		8,000
Sales				259,920
Sales discounts		3,977
Sales returns and allowances		17,155
Cost of goods sold		100,577
Sales salaries expense		35,609
Rent expense—Selling space		12,216
Store supplies expense		3,119
Advertising expense		22,093
Office salaries expense		32,490
Rent expense—Office space		3,119
Office supplies expense		1,040

Totals	$	429,395	$	429,395

On August 31, 2014, merchandise inventory was $30,666. Supplementary records of merchandising activities for the year ended August 31, 2015, reveal the following itemized costs.


Invoice cost of merchandise purchases	$	111,720
Purchase discounts received		2,346
Purchase returns and allowances		5,363
Costs of transportation-in		3,900

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

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