On June 30, 2010, the balances of the accounts appearing in the ledger of Andover Company are as follows:

Instructions1. Does Andover Company use a periodic or perpetual inventory system? Explain.2. Prepare a multiple-step income statement for Andover Company for the year ended June 30, 2010. The merchandise inventory as of June 30, 2010, was $188,200.3. Prepare the closing entries for Andover Company as of June 30,2010.

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$ 36,600 144,250 175,450 $ 18,750 1,073,000 12,000 Cash Sales Discounts Accounts Receivable Purchases Merchandise Inventory, July 1, 2009 Office Supplies Prepaid Insurance Land Purchases Returns and Allowances 6,050 9,000 70,000 341,550 Purchases Discounts 9,000 21,800 312,500 110,000 18,000 Freight In Sales Salaries Expense Advertising Expense Delivery Expense Store Equipment Accumulated Depreciation- Store Equipment Office Equipment Accumulated Depreciation- Office Equipment Accounts Payable Salaries Payable 11,800 Depreciation Expense- 157,000 Store Equipment Miscellaneous Selling Expense Office Salaries Expense Rent Expense Insurance Expense Office Supplies Expense Depreciation Expense- Office Equipment Miscellaneous Administrative Expense Rent Revenue Interest Expense 11,800 21,400 200,000 62,500 6,000 4,600 32,500 55,650 5,900 16,600 25,000 380,100 37,500 2,212,900 20,000 Unearned Rent Notes Payable Vanessa Andover, Capital Vanessa Andover, Drawing 3,000 11,700 12,500 1,500 Sales Sales Returns and Allowances