Reference no: EM13356559

Preparing Multi-step & Single-step Income statements by finding out Sales & Cost of Goods Figures.

BizKid Company's adjusted trial balance on August 31, 2005, its fiscal year-end, follows:

                                                           Debit                                       Credit

Merchandise inventory	$ 31,000
Other (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 and allowances	14,000
Cost of goods sold	82,600
Sales salaries expense	29,000
Rent expense-Selling space	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.