|
BizKid Company’s adjusted trial balance on August 31,
2011, its fiscal year-end, follows.
|
|
|
|
|
Debit
|
|
|
Credit
|
|
|
Merchandise inventory
|
|
$
|
32,000
|
|
|
|
|
|
Other (noninventory) assets
|
|
|
128,000
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
$
|
36,960
|
|
|
Common stock
|
|
|
|
|
|
64,560
|
|
|
Retained earnings
|
|
|
|
|
|
43,076
|
|
|
Dividends
|
|
|
8,000
|
|
|
|
|
|
Sales
|
|
|
|
|
|
218,880
|
|
|
Sales discounts
|
|
|
3,349
|
|
|
|
|
|
Sales returns and allowances
|
|
|
14,446
|
|
|
|
|
|
Cost of goods sold
|
|
|
85,312
|
|
|
|
|
|
Sales salaries expense
|
|
|
29,987
|
|
|
|
|
|
Rent expense—Selling space
|
|
|
10,287
|
|
|
|
|
|
Store supplies expense
|
|
|
2,627
|
|
|
|
|
|
Advertising expense
|
|
|
18,605
|
|
|
|
|
|
Office salaries expense
|
|
|
27,360
|
|
|
|
|
|
Rent expense—Office space
|
|
|
2,627
|
|
|
|
|
|
Office supplies expense
|
|
|
876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
363,476
|
|
$
|
363,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
On
August 31, 2010, merchandise inventory was $25,824. Supplementary records of
merchandising activities for the year ended August 31, 2011, reveal the
following itemized costs.
|
|
|
|
|
|
Invoice cost of merchandise purchases
|
$
|
94,080
|
|
Purchase discounts received
|
|
1,976
|
|
Purchase returns and allowances
|
|
4,516
|
|
Costs of transportation-in
|
|
3,900
|
|
1.
|
Compute the company’s net sales for the year.
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
218,880
|
|
|
|
Less: Sales discounts
|
|
|
(3,349
|
)
|
|
|
Sales
returns and allowances
|
|
|
(14,446
|
)
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
201,085
|
|
|
2.
|
Compute the company’s total cost of merchandise purchased
for the year.
|
|
Cost of Merchandise purchased:
|
|
|
|
|
|
|
Invoice cost of merchandise purchased
|
|
$
|
94,080
|
|
|
|
Purchase discounts received
|
|
|
(1,976
|
)
|
|
|
Purchase returns and allowances
|
|
|
(4,516
|
)
|
|
|
Costs of transportation-in
|
|
|
3,900
|
|
|
|
|
|
|
|
|
|
|
Total cost of merchandise purchased
|
|
$
|
91,488
|
|
3.
|
Prepare
a multiple-step income statement that includes separate categories for
selling expenses and for general and administrative expenses.
|
Explanation:
|
Cost
of goods sold (alternative computation):
|
|
|
|
Merchandise inventory, August 31, 2010
|
$
|
25,824
|
|
Total cost of merchandise purchased (from part
2)
|
|
91,488
|
|
|
|
|
|
Merchandise available for sale
|
|
117,312
|
|
Merchandise inventory, August 31, 2011
|
|
32,000
|
|
|
|
|
|
Cost of goods sold
|
$
|
85,312
|
|
|
|
4.
|
Prepare a single-step income statement that includes
these expense categories: cost of goods sold, selling expenses, and general
and administrative expenses.
 |