Chapter 5, Problem 3APSA

To determine

Concept Introduction:

Net Sales: It refers to that part of sales which is derived after deducting the sales returns and allowances and the sales discounts from gross sales.

Multiple-step income statement: It is one of the most commonly used methods to derive the net income as it uses multiple subtractions under multiple heads. It gives more and appropriate information to the users of the financial statement.

Single-step income statement: It is one of the simple methods to derive the net income as it uses just one subtraction. It takes all the revenues together and deducts all the expenses in one shot without bifurcating them under different heads.

To Determine/Prepare:

1. Net sales of Valley Company for the year,
2. Cost of merchandise purchased during the year
3. Multiple-step income statement of Valley Company
4. Single-step income statement of Valley Company