Rite Department Store uses a periodic inventory system. The adjusted trial balance of Rite Department Store at December 31, 2025, follows: 

Requirements 

1. Prepare Rite Department Store’s multi-step income statement for the year ended December 31, 2025. Assume ending Merchandise Inventory is $36,500. 

2. Journalize Rite Department Store’s closing entries.

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Adjusted Trial Balance December 31, 2025 Account Title Cash Accounts Receivable Merchandise Inventory (beginning) Supplies Furniture Accumulated Depreciation-Furniture Accounts Payable Salaries Payable Unearned Revenue Notes Payable, long-term Common Stock Retained Earnings Dividends Sales Revenue Sales Returns and Allowances Sales Discounts Purchases Purchase Returns and Allowances Purchase Discounts Freight In Selling Expenses Administrative Expenses Interest Expense Total Balance Debit $ 7,700 85,200 37,500 800 89,000 89,500 6,700 4,300 294,000 500 41,900 26,500 3,000 $ 686,600 Credit $ 18,300 28,700 2,600 14,200 33,000 70,000 13,100 387,000 113,000 6,700 $ 686,600