Question

Sylvia's Music Company uses a perpetual inventory system. The adjusted trial balance of Sylvia's Music Company at June 30, 2016, follows: Click the icon to view the adjusted trial balance.) Requirements 1. Prepare Sylvia's multi-step income statement for the year ended June 30, 2016. 2. Journalize Sylvia's closing entries. 3. Prepare a post-closing trial balance as of June 30, 2016

Answer 1

Requirement 1:

Sylvia's Music Company
Income Statement
Year ended June 30,2016
Sales revenue	$181,000
Less: Sales returns and allowances	($2,600)
Sales discounts	($4,500)
Net sales		$173,900
Cost of goods sold		($72,400)
Gross profit		$101,500
Operating expenses:
Selling expense	$18,900
Administrative expense	$16,000
Total Operating expenses		$34,900
Operating income		$66,600
Other income(expense):
Interest expense		($1,600)
Net income		$65,000

Requirement 2:

Closing Entries:

Date	Account title and Explanation	Debit	Credit
June 30,2016	Sales revenue	$181,000
	Income Summary		$181,000
	[To close revenue accounts]
June 30,2016	Income Summary	$116,000
	Sales returns and allowances		$2,600
	Sales discounts		$4,500
	Cost of goods sold		$72,400
	Selling expense		$18,900
	Administrative expense		$16,000
	Interest expense		$1,600
	[To close expenses accounts]
June 30,2016	Income summary [181,000-116,000]	$65,000
	Retained earnings		$65,000
	[To close income summary account]
June 30,2016	Retained earnings	$42,600
	Dividends		$42,600
	[To close dividends account]

Requirement 3:

Sylvia's Music Company
Post-closing Trial Balance
June 30,2016
Account title	Debit	Credit
Cash	$4,200
Accounts receivable	$38,700
Merchandise Inventory	$17,600
Office supplies	$300
Furniture	$39,300
Accumulated depreciation-furniture		$8,200
Accounts payable		$13,900
Salaries payable		$900
Unearned Revenue		$6,600
Notes payable, long-term		$16,000
Common stock		$17,000
Retained earnings [15,100+65,000-42,600]		$37,500
Totals	$100,100	$100,100