On April 30, 2008, the balances of the accounts appearing in the ledger of Headwinds Company are as follows:

Instructions
1. Does Headwinds Company use a periodic or perpetual inventory system? Explain.
2. Prepare a multiple-step income statement for Headwinds Company for the year ended April 30, 2008. The merchandise inventory as of April 30, 2008, was $94,100.
3. Prepare the closing entries for Headwinds Company as of April 30,2008.

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5 Accounts Receivable Merchandise Inventory, May 1, 200787,725 Purchases Returns and Allowances Sales Salaries Expense Store Equipment Accumulated Depreciation- ISI Delivery Expense Accumulated Depreciation Miscellaneous Selling Expense Salaries Payable Office Supplies Expense 18,750 laneous Administrative Expense 5,850 Sales Returns and Allowances