Response to the following problem:
Southern Cross Corporation supplies you with the following information applicable to the current year, December 31, 2016. The company uses the perpetual inventory system.
Delivery expense $ 2,000
Merchandize inventory (Dec. 31) 15,000
Cost of goods sold 70,000
Office supplies expense 7,000
Sales returns and allowances 10,000
Salaries expense 4,000
Unused supplies 5,000
1. Prepare an income statement. List expenses other than cost of goods sold as other expenses. Assume all accounts have normal balances.
2. Prepare all required closing entries. Include general ledger account numbers and a brief description for each entry.