PR 5-10A Periodic inventory accounts, multiple-step income statement, closing entries On December 31, 2014, the balances of the accounts appearing in the ledger of Wyman Company are as follows:
|
Cash |
$13,500 |
Sales Returns and Allowances |
$46,000 |
|
Accounts Receivable |
72,000 |
Sales Discounts |
29,000 |
|
Merchandise Inventory, |
Purchases |
$2,650,000 |
|
|
1-Jan-14 |
257,000 |
Purchases Returns and Allowances |
93,000 |
|
Office Supplies |
3,000 |
Purchases Discounts |
37,000 |
|
Prepaid Insurance |
4,500 |
Freight In |
48,000 |
|
Land |
150,000 |
Sales Salaries Expense |
300,000 |
|
Store Equipment |
270,000 |
Advertising Expense |
45,000 |
|
Accumulated Depreciation— |
Delivery Expense |
9,000 |
|
|
Store Equipment |
55,900 |
Depreciation Expense— |
|
|
Office Equipment |
78,500 |
Store Equipment |
6,000 |
|
Accumulated Depreciation— |
Miscellaneous Selling Expense |
12,000 |
|
|
Office Equipment |
16,000 |
Office Salaries Expense |
175,000 |
|
Accounts Payable |
27,800 |
Rent Expense |
28,000 |
|
Salaries Payable |
3,000 |
Insurance Expense |
3,000 |
|
Unearned Rent |
8,300 |
Office Supplies Expense |
2,000 |
|
Notes Payable |
50,000 |
Depreciation Expense— |
|
|
Capital Stock |
150,000 |
Office Equipment |
1,500 |
|
Retained Earnings |
430,500 |
Miscellaneous Administrative Expense |
3,500 |
|
Dividends |
25,000 |
Rent Revenue |
7,000 |
|
Sales |
3,355,000 |
Interest Expense |
2,000 |
Instructions
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, 2014. The merchandise inventory as of December 31, 2014, was $305,000.
3. Prepare the closing entries for Wyman Company as of December 31, 2014.
4. What would be the net income if the perpetual inventory system had been used?