Prepare a multiple-step income statement for Simkins Company

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Reference no: EM132751226

Problem - On June 30, 20Y9, the balances of the accounts appearing in the ledger of Simkins Company are as follows:

Cash

$125,000

Accounts Receivable

340,000

Inventory, July 1, 20Y8

415,000

Estimated Returns Inventory, July 1, 20Y8

25,000

Office Supplies

9,000

Prepaid Insurance

18,000

Land

300,000

Store Equipment

550,000

Accumulated Depreciation-Store Equipment

190,000

Office Equipment

250,000

Accumulated Depreciation-Office Equipment

110,000

Accounts Payable

85,000

Customer Refunds Payable

30,000

Salaries Payable

9,000

Unearned Rent

6,000

Notes Payable

50,000

Common Stock

300,000

Retained Earnings

520,000

Dividends

$  275,000

Sales

6,590,000

Purchases

4,100,000

Purchases Returns and Allowances

32,000

Purchases Discounts

13,000

Freight In

45,000

Sales Salaries Expense

580,000

Advertising Expense

315,000

Delivery Expense

18,000

Depreciation Expense-Store Equipment

12,000

Miscellaneous Selling Expense

28,000

Office Salaries Expense

375,000

Rent Expense

43,000

Insurance Expense

17,000

Office Supplies Expense

5,000

Depreciation Expense-Office Equipment

4,000

Miscellaneous Administrative Expense

16,000

Rent Revenue

32,500

Interest Expense

2,500

Required -

1. Does Simkins Company use a periodic or perpetual inventory system? Explain.

2. Prepare a multiple-step income statement for Simkins Company for the year ended June 30, 20Y9. The inventory as of June 30, 20Y9, was $508,000. The estimated cost of customer returns inventory for June 30, 20Y9, is estimated to increase to $33,000.

3. Prepare the closing entries for Simkins Company as of June 30, 20Y9.

4. What would be the net income if the perpetual inventory system had been used?

Reference no: EM132751226

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