Summary operating data for Cummerbund Company during the current year ended June 30, 2014

From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year under a perpetual inventory system: (a) Accounts Payable, (b) Advertising Expense, (c) Cost of Merchandise Sold, (d) Merchandise Inventory, (e) Sales, (f) Sales Discounts, (g) Sales Returns and Allowances, (h) Supplies, (i) Supplies Expense, (j) Valery Lavine, Drawing, (k) Wages Payable.


Answer:
(b) Advertising Expense
(c) Cost of Merchandise Sold
(e) Sales
(f) Sales Discounts
(g) Sales Returns and Allowances
(i) Supplies Expense

Note: (j) Valery Lavine, Drawing is closed to Valery Lavine, Capital, not Income Summary.



Summary operating data for Cummerbund Company during the current year ended June 30, 2014, are as follows: cost of merchandise sold, $2,400,000; administrative expenses, $420,000; interest expense, $30,000; rent revenue, $125,000; net sales, $3,750,000; and selling expenses, $550,000. Prepare a single-step income statement.


Answer:

CUMMERBUND COMPANY
Income Statement
For the Year Ended June 30, 2014
Revenues:
Net sales $3,750,000
Rent revenue 125,000
Total revenues $3,875,000
Expenses:
Cost of merchandise sold $2,400,000
Selling expenses 550,000
Administrative expenses 420,000
Interest expense 30,000
Total expenses 3,400,000
Net income $ 475,000