Computing merchandising amounts and formatting income statements
by | Mar 18, 2020 | Uncategorized
Problem 4-3A Computing merchandising amounts and formatting income statements LO C2, P4
[The following information applies to the questions displayed below.]
Compute the company’s total cost of merchandise purchased for the year.
| Valley Company’s adjusted trial balance on August 31, 2015, its fiscal year-end, follows. |
|
|
|
Debit |
|
|
Credit |
|
| Merchandise inventory |
|
$ |
36,500 |
|
|
|
|
| Other (noninventory) assets |
|
|
146,000 |
|
|
|
|
| Total liabilities |
|
|
|
|
$ |
42,158 |
|
| Common stock |
|
|
|
|
|
49,133 |
|
| Retained earnings |
|
|
|
|
|
71,965 |
|
| Dividends |
|
|
8,000 |
|
|
|
|
| Sales |
|
|
|
|
|
249,660 |
|
| Sales discounts |
|
|
3,820 |
|
|
|
|
| Sales returns and allowances |
|
|
16,478 |
|
|
|
|
| Cost of goods sold |
|
|
96,761 |
|
|
|
|
| Sales salaries expense |
|
|
34,203 |
|
|
|
|
| Rent expense—Selling space |
|
|
11,734 |
|
|
|
|
| Store supplies expense |
|
|
2,996 |
|
|
|
|
| Advertising expense |
|
|
21,221 |
|
|
|
|
| Office salaries expense |
|
|
31,208 |
|
|
|
|
| Rent expense—Office space |
|
|
2,996 |
|
|
|
|
| Office supplies expense |
|
|
999 |
|
|
|
|
|
|
|
|
|
|
|
|
| Totals |
|
$ |
412,916 |
|
$ |
412,916 |
|
|
|
|
|
|
|
|
|
|
|
|
On August 31, 2014, merchandise inventory was $29,456. Supplementary records of merchandising activities for the year ended August 31, 2015, reveal the following itemized costs.
|
|
|
|
| Invoice cost of merchandise purchases |
$ |
107,310 |
| Purchase discounts received |
|
2,254 |
| Purchase returns and allowances |
|
5,151 |
| Costs of transportation-in |
|
3,900
|
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