On December 31, 20Y5, the balances of the accounts appearing in the ledger of Wyman Company are as follows:

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?

Transcribed Image Text:

$ 13,500 $ 25,000 Cash Dividends Accounts Receivable 72,000 Sales 3,280,000 Inventory, January 1, 20Y5 Estimated Returns Inventory, 257,000 Purchases 2,650,000 Purchases Returns and Allowances 93,000 January 1, 20Y5 Office Supplies Prepaid Insurance Purchases Discounts 35,000 37,000 Freight In Sales Salaries Expense Advertising Expense Delivery Expense Depreciation Expense- Store Equipment Miscellaneous Selling Expense Office Salaries Expense Rent Expense 48,000 3,000 300,000 4,500 Land 150,000 45,000 Store Equipment Accumulated Depreciation- 270,000 9,000 Store Equipment Office Equipment Accumulated Depreciation- Office Equipment Accounts Payable Salaries Payable Customer Refunds Payable 55,900 6,000 12,000 175,000 78,500 28,000 16,000 77,800 Insurance Expense 3,000 Office Supplies Expense 3,000 2,000 50,000 Depreciation Expense- Office Equipment Miscellaneous Administrative Expense Unearned Rent 8,300 1,500 Notes Payable 50,000 3,500 Common Stock 150,000 7,000 Rent Revenue Retained Earnings Interest Expense 365,600 2,000