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 Don't use plagiarized sources. Get Your Custom Essay on periodic inventory accounts multiple step income statement closing entries on decemb 541799 For $10/Page 0nly | $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?
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