Assignment Instructions:
This assessment addresses the following course objective(s):
A) Record various business transactions in accordance with generally accepted accounting principles.
B) Analyze the basic financial statements
In this assignment, we will learn that there are two methods in preparing an income statement, the single-step and multi-step, both use the same number and render the same results.
Assignment Problem:
Concord Company's adjusted trial balance on August 31, its fiscal year-end, follows. It categorizes the following accounts as selling expenses: sales salaries expense, rent expense-selling space, store supplies expense, advertising expense. It categorizes the remaining expenses as general and administrative.
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Debit
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Credit
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Merchandise inventory (ending)
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44,000
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Other (non-inventory) assets
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176,000
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Total liabilities
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50,820
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K. Concord, Capital
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143,537
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K. Concord, Withdrawals
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8,000
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Sales
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300,960
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Sales discounts
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4,605
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Sales returns and allowances
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19,863
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Cost of goods sold
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115,842
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Sales salaries expense
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41,232
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Rent expense-Selling space
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14,145
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Store supplies expense
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3,612
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Advertising expense
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25,582
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Office salaries expense
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37,620
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Rent expense-Office space
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3,612
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Office supplies expense
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1,204
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Totals
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495,317
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495,317
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Beginning merchandise inventory was $35,508. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs.
Invoice cost of merchandise purchases 129,360
Purchases discounts received 2,717
Purchases returns and allowances 6,209
Costs of transportation-in 3,900
Required:
Q1. Compute the company's net sales for the year.
Q2. Compute the company's total cost of merchandise purchased for the year.
Q3. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.
Q4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.