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Appendix 2 PR 5-10B Periodic inventory accounts, multiple-step income statement, closing entries On June 30, 20Y9, the balances of the accounts appearing in the ledger of Simkins Company are as follows: Instructions 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?

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 5, Problem 10PB
Textbook Problem
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Appendix 2

PR 5-10B Periodic inventory accounts, multiple-step income statement, closing entries

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

Chapter 5, Problem 10PB, Appendix 2 PR 5-10B Periodic inventory accounts, multiple-step income statement, closing entries On

Instructions

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?

(1)

To determine

Explain whether Company S uses a periodic inventory system or perpetual inventory system.

Explanation of Solution

Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year...

(2)

To determine

Prepare the income statement of Company S for the year ended June 30, 20Y9.

3.

To determine

Record the closing entries of Company S.

4.

To determine

Identify the amount of net income for S Company under the perpetual inventory system.

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Chapter 5 Solutions

Financial And Managerial Accounting
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