On June 30, 20Y9, 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, 20Y9. The inventory as of June 30, 20Y9, was $508,000. The estimated cost of customer returns inventory for June 30, 20Y9, is estimated to increase to $33,000.

3. Prepare the closing entries for Simkins Company as of June 30, 20Y9.

4. What would be the net income if the perpetual inventory system had been used?

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$ 275,000 Cash $125,000 Dividends Accounts Receivable 340,000 Sales 6,590,000 Inventory, July 1, 20Y8 Estimated Returns Inventory, July 1, 20Y8 Office Supplies Prepaid Insurance Land 415,000 Purchases 4,100,000 Purchases Returns and Allowances 32,000 25,000 Purchases Discounts 13,000 Freight In Sales Salaries Expense Advertising Expense Delivery Expense Depreciation Expense- Store Equipment Miscellaneous Selling Expense Office Salaries Expense Rent Expense Insurance Expense Office Supplies Expense Depreciation Expense- Office Equipment Miscellaneous Administrative Expense 45,000 9,000 18,000 580,000 300,000 315,000 550,000 Store Equipment Accumulated Depreciation- Store Equipment Office Equipment Accumulated Depreciation- Office Equipment Accounts Payable Customer Refunds Payable Salaries Payable 18,000 190,000 12,000 250,000 28,000 375,000 110,000 43,000 17,000 85,000 30,000 5,000 9,000 Unearned Rent 6,000 4,000 Notes Payable 16,000 50,000 Common Stock 300,000 Rent Revenue 32,500 Retained Earnings 520,000 Interest Expense 2,500