On July 31, 2012 the balances of the accounts appearing in the ledger of Sagebrush Company are as follows.

Instructions

1. Does Sagebrush Company use a periodic or perpetual inventory system? Explain.

2. Prepare a multiple-step income statement for Sagebrush Company for the year ended July 31, 2012. The merchandise inventory as of July 31, 2012, was $80,000.

3. Prepare the closing entries for Sage brush Company as of July 31, 2012.

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

Transcribed Image Text:

Sales Returms and Allowances $ 12.000 Cash S 16.300 Accounts Receivahle 72,000 Sales Discounts R,O00 Merchandise Inventory. August 1, 2011 Ofice Supplies Purchases 700,000 90,000 Purchases Returns and Allowances 6,000 3,000 Purchases Discounts 4,000 4.500 Freight in Sales Salaries Expense Propaid Insurance Land 30.000 300,000 300,000 270,000 Stare Equipment Advertising Expense S5,000 Accumulated Depreciation Delvery Expense 9,000 Store Equipment 5,900 Depreciation Expense- Office Equipment Accumulated Depreciation- 78,500 Store Equipment 6.000 Miscellaneous Sellng Expense Ofice Salaries Expense 10,000 Office Equipment 16,000 150,000 Accounts Payable Salacies Payable 27,800 Rent Expense 30,000 3,000 Insurance Expense 3,000 Unearned Flent Office Supplies Expense Depreciation Expense- Ofice tquipment Miscellaneous Administrative Expense 8.300 2.000 Notes Payable 50,00 Cepital Stock Retained tarnings Dividends 80,000 1,500 275,300 3,500 35,000 Rent Hevenue 7,000 Sales 1.660.000 Interest Expense 2.000