On June 30, 2019, the balances of the accounts appearing in the ledger of SimkinsCompany are as follows:$ 125,000 PurchasesCash$4,100,000Accounts RecelvablePurchases Returns and Allowances340,00032,000Merchandise Inventory, July 1, 2018Estimated Returns InventoryOffice SuppliesPrepaid InsurancePurchases Discounts13,00045,000415,000Freight InSales Salaries ExpenseAdvertising ExpenseDelivery ExpenseDepreciation Expense-Store EquipmentMiscellaneous Selling ExpenseOffice Salaries ExpenseRent ExpenseInsurance ExpenseOffice Supplies ExpenseDepreciation Expense-Office EquipmentMiscellaneous Administrative Expense25,0009,000580,00018,000315,000Land300,00018,000Store EquipmentAccumulated Depreciation-550,00012,000Store EquipmentOffice EquipmentAccumulated Depreciation-Office EquipmentAccounts Payable190,00028,000250,000375,00043,000110,00017,0005,00085,000Customer Refunds PayableSalaries Payable20,0004,00016,0009,000Unearned Rent6,000Notes PayableAmy Gant, CapitalAmy Gant, Drawing50,000 Rent Revenue32,5002,500820,000 Interest Expense275,000Sales6,590,000Instructions- Does Simkins Company use a periodic or perpetual inventory system? Explain.1.2. Prepare a multiple-step income statement for Simkins Company for the year endedJune 30, 2019. The merchandise inventory as of June 30, 2019, was $508,000. Theadjustment for estimated returns inventory for sales for the year ending December 31,2019, was $33,000.3. Prepare the closing entries for Simkins Company as of June 30, 2019.4. What would the net income have been if the perpetual inventory system had been used?

Question
Asked Dec 12, 2019
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On June 30, 2019, the balances of the accounts appearing in the ledger of Simkins
Company are as follows:
$ 125,000 Purchases
Cash
$4,100,000
Accounts Recelvable
Purchases Returns and Allowances
340,000
32,000
Merchandise Inventory, July 1, 2018
Estimated Returns Inventory
Office Supplies
Prepaid Insurance
Purchases Discounts
13,000
45,000
415,000
Freight In
Sales Salaries Expense
Advertising Expense
Delivery Expense
Depreciation Expense-
Store Equipment
Miscellaneous Selling Expense
Office Salaries Expense
Rent Expense
Insurance Expense
Office Supplies Expense
Depreciation Expense-
Office Equipment
Miscellaneous Administrative Expense
25,000
9,000
580,000
18,000
315,000
Land
300,000
18,000
Store Equipment
Accumulated Depreciation-
550,000
12,000
Store Equipment
Office Equipment
Accumulated Depreciation-
Office Equipment
Accounts Payable
190,000
28,000
250,000
375,000
43,000
110,000
17,000
5,000
85,000
Customer Refunds Payable
Salaries Payable
20,000
4,000
16,000
9,000
Unearned Rent
6,000
Notes Payable
Amy Gant, Capital
Amy Gant, Drawing
50,000 Rent Revenue
32,500
2,500
820,000 Interest Expense
275,000
Sales
6,590,000
Instructions
- Does Simkins Company use a periodic or perpetual inventory system? Explain.
1.
2. Prepare a multiple-step income statement for Simkins Company for the year ended
June 30, 2019. The merchandise inventory as of June 30, 2019, was $508,000. The
adjustment for estimated returns inventory for sales for the year ending December 31,
2019, was $33,000.
3. Prepare the closing entries for Simkins Company as of June 30, 2019.
4. What would the net income have been if the perpetual inventory system had been used?
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On June 30, 2019, the balances of the accounts appearing in the ledger of Simkins Company are as follows: $ 125,000 Purchases Cash $4,100,000 Accounts Recelvable Purchases Returns and Allowances 340,000 32,000 Merchandise Inventory, July 1, 2018 Estimated Returns Inventory Office Supplies Prepaid Insurance Purchases Discounts 13,000 45,000 415,000 Freight In Sales Salaries Expense Advertising Expense Delivery Expense Depreciation Expense- Store Equipment Miscellaneous Selling Expense Office Salaries Expense Rent Expense Insurance Expense Office Supplies Expense Depreciation Expense- Office Equipment Miscellaneous Administrative Expense 25,000 9,000 580,000 18,000 315,000 Land 300,000 18,000 Store Equipment Accumulated Depreciation- 550,000 12,000 Store Equipment Office Equipment Accumulated Depreciation- Office Equipment Accounts Payable 190,000 28,000 250,000 375,000 43,000 110,000 17,000 5,000 85,000 Customer Refunds Payable Salaries Payable 20,000 4,000 16,000 9,000 Unearned Rent 6,000 Notes Payable Amy Gant, Capital Amy Gant, Drawing 50,000 Rent Revenue 32,500 2,500 820,000 Interest Expense 275,000 Sales 6,590,000 Instructions - Does Simkins Company use a periodic or perpetual inventory system? Explain. 1. 2. Prepare a multiple-step income statement for Simkins Company for the year ended June 30, 2019. The merchandise inventory as of June 30, 2019, was $508,000. The adjustment for estimated returns inventory for sales for the year ending December 31, 2019, was $33,000. 3. Prepare the closing entries for Simkins Company as of June 30, 2019. 4. What would the net income have been if the perpetual inventory system had been used?

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Expert Answer

Step 1
  1. Company S uses the periodic system as it records the accounts for purchases, freight-in-charge, purchase discounts, and purchases returns and allowances.
Step 2
  1. Prepare multi-step income statement.
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Amount ($) Amount ($) Particulars Amount ($) Sales 6,590,000 Cost of merchandise sold: Merchandise inventory, January 1, 2019 415,000 Cost of merchandise purchased: Purchases 4,100,000 Purchase returns and allowances (32,000) (13,000) Purchase discounts Net Purchases 4,055,000 45,000 Freight-in Total cost of merchandise purchased 4,100,000 Merchandise available for sale 4,515,000 (508,000) Merchandise inventory, December 31, 2019 Cost of merchandise sold before estimated returns 4,007,000 Increase in estimated returns inventory (33,000) Cost of merchandise sold (3,974,000) Gross Profit 2,616,000

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Step 3

Answer for multi-step i...

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Expenses: Selling expenses: Sales and salaries expenses 580,000 Advertising expenses 315,000 18,000 Delivery expense 12,000 Depreciation expense - store equipment Miscellaneous selling expense 28,000 953,000 Total Selling Expenses Administrative expenses: Office salaries expense 375,000 Rent expense 43,000 17,000 5,000 Insurance expense Office supplies expense 4,000 Depreciation expense - office equipment Miscellaneous administrative expense 16,000 460,000 Total Administrative Expenses Total Operating Expenses Income From Operations (1,413,000) 1,203,000 Other revenue and expenses: Rent revenue 32,500 30,000 Interest expense (2,500) 1,233,000 Net Income

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