The following is an alphabetical list of Bud’s Bakery’s adjusted account balances at the end of the company’s fiscal year on November 30, 2024:

Additional facts:
1. Bud’s Bakery uses a periodic inventory system with the earnings approach.
2. Of the mortgage payable, $8,500 is due on March 31, 2025.
3. A physical count determined that merchandise inventory on hand at November 30, 2024, was $37,350.
4. The owner made no capital contributions during the year.

Instructions
a. Prepare a multiple-step income statement, statement of owner’s equity, and classified balance sheet for the November 30, 2024, year end.
b. Prepare the closing journal entries.
c. Post the closing entries to the Merchandise Inventory and capital accounts. Check that the balances in these accounts are the same as the amounts on the balance sheet.

Taking It Further

If you had not been told that Bud’s Bakery uses a periodic inventory system, how could you have determined that? What information is available in a periodic inventory system that is not available in a perpetual inventory system?

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Accounts payable Accounts receivable Accumulated depreciation-building Accumulated depreciation-equipment B. Hachey, capital B. Hachey, drawings Building Cash Delivery expense Depreciation expense Equipment Freight in Insurance expense Interest expense Land $ 32,310 13,770 61,200 19,880 104,480 12,000 175,000 8,500 8,200 14,000 57,000 5,060 9,000 5,300 85,000 Merchandise inventory Mortgage payable Prepaid insurance Property tax expense Purchase discounts Purchase returns and allowances Purchases Rent revenue Salaries expense Salaries payable Sales Sales discounts Sales returns and allowances Unearned revenue Utilities expense $ 34,360 106,000 4,500 3,500 6,300 13,315 634,700 2,800 122,000 8,500 872,000 8,250 9,845 3,000 19,800