Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 44

Use the data for Valley Company in Problem 5-3A to complete the following requirements.
Required
1. Prepare closing entries as of August 31, 2015 (the perpetual inventory system is used).
Analysis Component
2. The company makes all purchases on credit, and its suppliers uniformly offer a 3% sales discount. Does it appear that the company's cash management system is accomplishing the goal of taking all available discounts Explain.
3. In prior years, the company experienced a 4% returns and allowance rate on its sales, which means approximately 4% of its gross sales were eventually returned outright or caused the company to grant allowances to customers. How do this year's results compare to prior years' results
Reference: Problem 5-3A
Valley Company's adjusted trial balance on August 31, 2015, its fiscal year-end, follows.

On August 31, 2014, merchandise inventory was $25,400. Supplementary records of merchandising activities for the year ended August 31, 2015, reveal the following itemized costs.

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.