Reference no: EM132751239
Problem - Periodic inventory accounts, multiple-step income statement, closing entries
On December 31, 20Y5, the balances of the accounts appearing in the ledger of Wyman Company are as follows:
|
Cash
|
$13,500
|
|
Accounts Receivable
|
72,000
|
|
Inventory, January 1, 20Y5
|
257,000
|
|
Estimated Returns Inventory, January 1, 20Y5
|
35,000
|
|
Office Supplies
|
3,000
|
|
Prepaid Insurance
|
4,500
|
|
Land
|
150,000
|
|
Store Equipment
|
270,000
|
|
Accumulated Depreciation-Store Equipment
|
55,900
|
|
Office Equipment
|
78,500
|
|
Accumulated Depreciation-Office Equipment
|
16,000
|
|
Accounts Payable
|
77,800
|
|
Salaries Payable
|
3,000
|
|
Customer Refunds Payable
|
50,000
|
|
Unearned Rent
|
8,300
|
|
Notes Payable
|
50,000
|
|
Common Stock
|
150,000
|
|
Retained Earnings
|
365,600
|
|
Dividends
|
$25,000
|
|
Sales
|
3,280,000
|
|
Purchases
|
2,650,000
|
|
Purchases Returns and Allowances
|
93,000
|
|
Purchases Discounts
|
37,000
|
|
Freight In
|
48,000
|
|
Sales Salaries Expense
|
300,000
|
|
Advertising Expense
|
45,000
|
|
Delivery Expense
|
9,000
|
|
Depreciation Expense-Store Equipment
|
6,000
|
|
Miscellaneous Selling Expense
|
12,000
|
|
Office Salaries Expense
|
175,000
|
|
Rent Expense
|
28,000
|
|
Insurance Expense
|
3,000
|
|
Office Supplies Expense
|
2,000
|
|
Depreciation Expense-Office Equipment
|
1,500
|
|
Miscellaneous Administrative Expense
|
3,500
|
|
Rent Revenue
|
7,000
|
|
Interest Expense
|
2,000
|
Required -
1. Does Wyman Company use a periodic or perpetual inventory system? Explain.
2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 20Y5. The inventory as of December 31, 20Y5, was $305,000. The estimated cost of customer returns inventory for December 31, 20Y5, is estimated to increase to $40,000.
3. Prepare the closing entries for Wyman Company as of December 31, 20Y5.
4. What would be the net income if the perpetual inventory system had been used?