Use the data for Albin Company in Problem 5-4B to complete the following requirements:

Required 1. Prepare closing entries as of March 31, 2005 (the perpetual inventory system is used).

Analysis Component 2. The company makes all purchases on credit, and its suppliers uniformly offer a 3% sales discount. Does it appear that the company’s cash management system is accomplishing the goal of taking all available discounts? Explain.

3. In prior years, the company experienced a 5% returns and allowance rate on its sales, which means approximately 5% of its gross sales were eventually returned outright or caused the company to grant allowances to customers. How do this year’s results compare to prior years’ results?

Problem 5-4B

Albin Company’s adjusted trial balance on March 31, 2005, its fiscal year-end, follows:

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Debit Credit Merchandise inventory Other (noninventory) assets Total liabilities $ 46,500 190,600 $ 52,500 R. Albin, Capital 152,475 R. Albin, Withdrawals 2,000 Sales. 318,000 Sales discounts 4,875 Sales returns and allowances. 21,000 Cost of goods sold 123,900 Sales salaries expense. 43,500 Rent expense-Selling space 15,000 [continued on next page]