On June 30, 2016, 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, 2016. The merchandise inventory as of June 30, 2016, was $508,000.
3. Prepare the closing entries for Simkins Company as of June 30, 2016.
4. What would be the net income if the perpetual inventory system had been used?

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Cash Accounts Receivable Merchandise Inventory, July 1, 2015 Office Supplies Prepaid Insurance Land Store Equipment Accumulated Depreciation 125,000 Purchases 340,000 Purchases Returns and Allowances 415,000 Purchases Discounts $4,100,000 32,000 13,000 45,000 580,000 315,000 18,000 9,000 Freight In 18,000 300,000 550,000 Sales Salaries Expense Advertising Expense Delivery Expense Depreciation Expense- 190,000 250,000 Store Equipment Miscellaneous Selling Expense Office Salaries Expense 12,000 28,000 375,000 43,000 17,000 5,000 Store Equipment Office Equipment Accumulated Depreciation Office Equipment Accounts Payable Salaries Payable Unearned Rent Notes Payable Common Stock Retained Earnings Dividends Sales 110,000 Rent Expense 85,000 Insurance Expense Office Supplies Expense Depreciation Expense- 9,000 6,000 50,000 300,000 525,000 275,000 6,590,000 Office Equipment Miscellaneous Administrative Expense Rent Revenue Interest Expense 4,000 16,000 32,500 2,500