Periodic inventory accounts, multiple-step income statement, closing entries On December 31, 20Y5, the balances of the accounts appearing in the ledger of Wyman Company are as follows:

Cash $ 13,500 Dividends $ 25,000 Accounts Receivable 72,000 Sales 3,280,000 Inventory, January 1, 20Y5 257,000 Purchases 2,650,000 Estimated Returns Inventory, Purchases Returns and Allowances 93,000 January 1, 20Y5 35,000 Purchases Discounts 37,000 Office Supplies 3,000 Freight In 48,000 Prepaid Insurance 4,500 Sales Salaries Expense 300,000 Land 150,000 Advertising Expense 45,000 Store Equipment 270,000 Delivery Expense 9,000 Accumulated Depreciation— Depreciation Expense—

Store Equipment 55,900 Store Equipment 6,000 Office Equipment 78,500 Miscellaneous Selling Expense 12,000 Accumulated Depreciation— Office Salaries Expense 175,000 Office Equipment 16,000 Rent Expense 28,000 Accounts Payable 77,800 Insurance Expense 3,000 Salaries Payable 3,000 Office Supplies Expense 2,000 Customer Refunds Payable 50,000 Depreciation Expense—

Unearned Rent 8,300 Office Equipment 1,500 Notes Payable 50,000 Miscellaneous Administrative Expense 3,500 Common Stock 150,000 Rent Revenue 7,000 Retained Earnings 365,600 Interest Expense 2,000 Instructions 1. Does Wyman Company use a periodic or perpetual inventory system? Explain.

2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 20Y5. The inventory as of December 31, 20Y5, was $305,000. The estimated cost of customer returns inventory for December 31, 20Y5, is estimated to increase to $40,000.

3. Prepare the closing entries for Wyman Company as of December 31, 20Y5.

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

AppendixLO1