Chapter 6, Problem 6.9APR

Periodic inventory accounts, multiple-step income statement, closing entries

On December 31, 2019, the balances of the accounts appearing in the ledger of Wyman

Company are as follows:

Cash	$13,500
Accounts Receivable	72,000
Merchandise Inventory, January 1,2019	257,000
Estimated Returns Inventory	35,000
Office Supplies	3,000
Prepaid Insurance	4,500
Land	150,000
Store Equipment	270,000
Accumulated Depreciation—Store Equipment	55000
Office Equipment	78,500
Accumulated Depreciation—Office Equipment	16000
Accounts Payable	27,800
Customer Refunds Payable	50,000
Salaries Payable	3,000
Unearned Rent	8,300
Notes Payable	50,000
Shirley Wyman, Capital	515,600
Shirley Wyman, Drawing	25,000
Sales	3280000
Purchases	2650000
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

Instructions

1. 1. Does Wyman Company use a periodic or perpetual inventory system? Explain.
2. 2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 2019. The merchandise inventory as of December 31, 2019, was $305,000. The adjustment for estimated returns inventory for sales for the year ending December 31, 2019, was $30,000.
3. 3. Prepare the closing entries for Wyman Company as of December 31, 2019.
4. 4. What would the net income have been if the perpetual inventory system had been used?