I am having trouble with this problem that is due tonight. Can someone please help!! I am unsure what to do with the information given after the adjusted trial balance. Do I add those numbers into the adjusted trial balance or what do I do with them? HELP!!
BizKid Company’s adjusted trial balance on August 31, 2005, its fiscal year-end, follows:
Debit Credit
Merchandise inventory $ 31,000
Noninventory assets 120,400
Total liabilities $ 35,000
N. Kidman, Capital 101,650
N. Kidman, Withdrawals 8,000
Sales 212,000
Sales discounts 3,250
Sales returns&allowances 14,000
Cost of goods sold 82,600
Sales salaries expense 29,000
Rent expense 10,000
Store supplies expense 2,500
Advertising expense 18,000
Office salaries expense 26,500
Rent expense—Office space 2,600
Office supplies expense 800
Totals $348,650 $348,650
On August 31, 2004, merchandise inventory was $25,000. Supplementary records of merchandising
activities for the year ended August 31, 2005, reveal the following itemized costs:
Invoice cost of merchandise purchases $91,000
Purchase discounts received 1,900
Purchase returns and allowances 4,400
Costs of transportation-in 3,900
Required
1. Compute the company’s net sales for the year.
2. Compute the company’s total cost of merchandise purchased for the year.
3. Prepare a multiple-step income statement that includes separate categories for selling expenses
and for general and administrative expenses.
4. Prepare a single-step income statement that includes these expense categories: cost of goods sold,
selling expenses, and general and administrative expenses
To solve this problem, we will use the information given in the adjusted trial balance and the supplementary records of merchandising activities. Below are the steps to find the answers to each of the required questions:
1. Computing the company's net sales for the year:
In the adjusted trial balance, we are given the Sales, Sales discounts, and Sales returns & allowances. Net sales can be calculated by subtracting the total of Sales discounts and Sales returns & allowances from Sales.
Net Sales = Sales - Sales discounts - Sales returns & allowances
2. Computing the company's total cost of merchandise purchased for the year:
In the supplementary records of merchandising activities, we are given the Invoice cost of merchandise purchases, Purchase discounts received, Purchase returns and allowances, and Costs of transportation-in.
Total Cost of Merchandise Purchased = Invoice cost of merchandise purchases - Purchase returns and allowances + Costs of transportation-in - Purchase discounts received
3. Preparing a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses:
To prepare a multiple-step income statement, we need to categorize the expenses into selling expenses and general and administrative expenses.
Selling expenses typically include expenses directly related to selling merchandise, such as Sales salaries expense and Advertising expense.
General and administrative expenses include other operating expenses like Rent expense, Office salaries expense, and Office supplies expense.
4. Preparing a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses:
A single-step income statement groups all the expenses together into a single category. To prepare this statement, we just need to sum up the cost of goods sold, selling expenses, and general and administrative expenses.
It is important to note that the detailed calculations for each step may require additional information or formulas depending on the specific scenario. Make sure to review the instructions and details provided in your course material.