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Problem 5-4A Computing merchandising amounts and formatting income statements LO C2, P4[The following information applies to the questions displayed below.]Valley Company’s adjusted trial balance on August 31, 2013, its fiscal year-end, follows.DebitCredit Merchandise inventory$34,500 Other (noninventory) assets138,000 Total liabilities$39,848 K. Valley, Capital115,114 K. Valley, Withdrawals8,000 Sales235,980 Sales discounts3,610 Sales returns and allowances15,575 Cost of goods sold91,673 Sales salaries expense32,329 Rent expense—Selling space11,091 Store supplies expense2,832 Advertising expense20,058 Office salaries expense29,498 Rent expense—Office space2,832 Office supplies expense944 Totals$390,942$390,942On August 31, 2012, merchandise inventory was $27,842. Supplementary records of merchandising activities for the year ended August 31, 2013, reveal the following itemized costs.Invoice cost of merchandise purchases$101,430 Purchase discounts received2,130 Purchase returns and allowances4,869 Costs of transportation-in3,900ReferencesSection BreakProblem 5-4A Computing merchandising amounts and formatting income statements LO C2, P44.Required:1.Compute the company’s net sales for the year.WorksheetDifficulty: MediumLearning Objective: 05-P4 Define and prepare multiple-step and single-step income statements.Problem 5-4A Part 1Learning Objective: 05-C2 Identify and explain the inventory asset and cost flows of a merchandising company.Problem 5-4A Part 22.Compute the company’s total cost of merchandise purchased for the year. 05-P4 Define and prepare multiple-step and single-step income statements.Problem 5-4A Part 2Learning Objective: 05-C2 Identify and explain the inventory asset and cost flows of a merchandising company.Problem 5-4A Part 33.Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses.WorksheetDifficulty: MediumLearning Objective: 05-P4 Define and prepare multiple-step and single-step income statements.Problem 5-4A Part 3Learning Objective: 05-C2 Identify and explain the inventory asset and cost flows of a merchandising company.Problem 5-4A Part 44.Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.