Instructions: prepare answers to the following problem and questions. You may use Word or Excel or prepare the solutions manually and upload as a pdf file. You answers must be submitted by Friday 2/11/22 at 11:00 pm. PROBLEM 1 - Valley Company's adjusted account balances from its general ledger 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, and advertising expense. It categorizes the remaining expenses as general and administrative. Adjusted Account Balances Merchandise inventory (ending) Other (non-inventory) assets Total liabilities K. Valley, Capital K. Valley, Withdrawals Sales Debit $41,500 166,000 Credit $47,933 136,056 8,000 283,860 Sales discounts 4,343 Sales returns and allowances 18,735 Cost of goods sold 109,483 Sales salaries expense 38,889 Rent expense-Selling space 13,341 Store supplies expense 3,406 Advertising expense 21,128 Office salaries expense 35,483 Rent expense-Office space 3,406 Office supplies expense 1,135 Totals $ 467,849 $ 467,849 Beginning merchandise inventory was $33,491. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs. Invoice cost of merchandise purchases Purchases discounts received Purchases returns and allowances Costs of transportation-in $122,010 2,562 5,856 3,900 ended August 31 reveal the following itemized costs. Invoice cost of merchandise purchases Purchases discounts received Purchases returns and allowances Costs of transportation-in Required for Problem 1: $122,010 2,562 5,856 3,900 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 net goods sold, selling expenses, and general and administrative expenses. sales, cost of Short answer questions: 4. In your own words, explain what is meant by inventory shrinkage. How do managers shrinkage? account for 5. How do closing entries for a merchandising company that uses the perpetual inventory system differ from the closing entries for a service company