On June 30, 2018, the balances of the accounts appearing in the ledger of Simkins Company $1,208,000 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, 2018. The inventory as of June 30, 2018, was $508,000. The estimated cost of customer returns inventory for June 30, 2018 is estimated to increase to $33,000.
3. Prepare the closing entries for Simkins Company as of June 30, 2018.
4. What would be the net income if the perpetual inventory system had been used?

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Cash Accounts Receivable Inventory, July 1, 2017 Estimated Returns Inventory 125,000 Dividends 275,000 6,590,000 4,100,000 Purchases Returns and Allowances 32,000 13,000 45,000 580,000 315,000 18,000 340,000 Sales 415,000 Purchases July 1, 2017 Office Supplies Prepaid Insurance Land Store Equipment Accumulated Depreciation 25,000 Purchases Discounts 9,000 Freight In 18,000 Sa Slaries Expense 300,000 Advertising Expense 550,000 Delivery Expense Depreciation Expense Store Equipment Office Equipment Accumulated Depreciation 190,000 250,000 Store Equipment Miscellaneous Selling Expense Office Salaries Expense 12,000 8,000 375,000 43,000 17,000 5,000 10,000 Rent Expense 85,000 Insurance Expense 30,000 Office Supplies Expense Office Equipment Accounts Payable Customer Refunds Payable Salaries Payable Unearned Rent Notes Payable Common Stock Retained Earnings 9,000 Depreciation Expense- ,000 Office Equipment 4,000 50,000 Miscellaneous Administrative Expe 16,000 32,500 2,500 300,000 Rent Revenue 520,000 Interest Expense