Question

Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows: 110 Cash $ 83,600 112 Accounts Receivable 233,900 115 Merchandise Inventory 624,400 116 Estimated Returns Inventory 28,000 117 Prepaid Insurance 16,800 118 Store Supplies 11,400 123 Store Equipment 569,500 124 Accumulated Depreciation-Store Equipment 56,700 210 Accounts Payable 96,600 211 Salaries Payable — 212 Customers Refunds Payable 50,000 310 Lynn Tolley, Capital, June 1, 2015 685,300 311 Lynn Tolley, Drawing 135,000 312 Income Summary — 410 Sales 5,069,000 510 Cost of Merchandise Sold 2,823,000 520 Sales Salaries Expense 664,800 521 Advertising Expense 281,000 522 Depreciation Expense — 523 Store Supplies Expense — 529 Miscellaneous Selling Expense 12,600 530 Office Salaries Expense 382,100 531 Rent Expense 83,700 532 Insurance Expense — 539 Miscellaneous Administrative Expense 7,800 During May, the last month of the fiscal year, the following transactions were completed: Record the following transactions on page 20 of the journal. Refer to the Chart of Accounts for exact wording of account titles. May 1 Paid rent for May, $5,000. 3 Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000. 4 Paid freight on purchase of May 3, $600. 6 Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the merchandise sold was $41,000. 7 Received $22,300 cash from Halstad Co. on account. 10 Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000. 13 Paid for merchandise purchased on May 3. 15 Paid advertising expense for last half of May, $11,000. 16 Received cash from sale of May 6. 19 Purchased merchandise for cash, $18,700. 19 Paid $33,450 to Buttons Co. on account. 20 Paid Korman Co. a cash refund of $13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was $13,500 and the cost of the returned merchandise was $8,000. Record the following transactions on page 21 of the journal. Refer to the Chart of Accounts for exact wording of account titles. May 20 Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,000. The cost of the merchandise sold was $70,000. 21 For the convenience of Crescent Co., paid freight on sale of May 20, $2,300. 21 Received $42,900 cash from Gee Co. on account. 21 Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000. 24 Returned of damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000. 26 Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800. 28 Paid sales salaries of $56,000 and office salaries of $29,000. 29 Purchased store supplies for cash, $2,400. 30 Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, $78,750. The cost of the merchandise sold was $47,000. 30 Received cash from sale of May 20 plus freight paid on May 21. 31 Paid for purchase of May 21, less return of May 24. Required: 1. Enter the May 1 balances of each of the accounts in the appropriate balance column of a four-column account. Enter May 1 in the date column. Write Balance in the item section, and place a check mark (√) in the Posting Reference column. Journalize the transactions for July, starting on Page 20 of the journal.* 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). • Merchandise inventory on May 31, $570,000 • Insurance expired during the year, $12,000 • Store supplies on hand on May 31, $4,000 • Depreciation for the current year, $14,000 • Accrued salaries on May 31: Sales salaries, $7,000 Office salaries, $6,600 Total accrued salaries: $13,600 • The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of merchandise sold. 5. (Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. A. Journalize the adjusting entries. Record the adjusting entries on Page 22 of the journal.* B. Post the adjusting entries. 7. Prepare an adjusted trial balance. 8. Prepare A. An income statement. B. A statement of owner’s equity. C. A balance sheet. 9. A. Prepare the closing entries. Record the closing entries on Page 23 of the journal. B. Post the closing entries. Indicate closed accounts by inserting 0 (zero) in either of the Balance columns opposite the closing entry. Insert the new balance in the owner’s capital account. 10. Prepare a post-closing trial balance. * Refer to the Chart of Accounts for exact wording of account titles

Answer 1

Since, the question is very long and the data is all mixed up, I was able to complete only the journal entry related part of the question.

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The journal entries are prepared as below:

Part 1)

The journal entries are as follows:

Date	Account Titles	Debit	Credit
May 01	Rent Expense	$5,000
	Cash		$5,000
May 03	Merchandise Inventory	$36,000
	Accounts Payable - Martin Co.		$36,000
May 04	Merchandise Inventory (Freight)	$600
	Cash		$600
May 06	Accounts Receivables - Korman Co.	$68,500
	Sales		$68,500
	Cost of Goods Sold	$41,000
	Merchandise Inventory		$41,000
May 07	Cash	$22,300
	Accounts Receivables - Halstad Co.		$22,300
May 10	Cash	$54,000
	Sales		$54,000
	Cost of Goods Sold	$32,000
	Merchandise Inventory		$32,000
May 13	Accounts Payable - Martin Co.	$36,000
	Cash (36,000*98%)		$35,280
	Merchandise Inventory (36,000*2%)		$720
May 15	Advertising Expense	$11,000
	Cash		$11,000
May 16	Cash (68,500*98%)	$67,130
	Sales Discount (68,500*2%)	$1,370
	Accounts Receivables - Korman Co.		$68,500
May 19	Merchandise Inventory	$18,700
	Cash		$18,700
May 19	Accounts Payable - Buttons Co.	$33,450
	Cash		$33,450
May 20	Sales Return and Allowances	$13,230
	Cash		$13,230
	Merchandise Inventory	$8,000
	Cost of Goods Sold		$8,000
May 20	Accounts Receivables - Crescent Co.	$110,000
	Sales		$110,000
	Cost of Goods Sold	$70,000
	Merchandise Inventory		$70,000
May 21	Accounts Receivables - Crescent Co.	$2,300
	Cash		$2,300
May 21	Cash	$42,900
	Accounts Receivables - Gee Co.		$42,900
May 21	Merchandise Inventory	$88,000
	Accounts Payable - Osterman Co.		$88,000
May 24	Accounts Payable - Osterman Co.	$5,000
	Merchandise Inventory		$5,000
May 26	Sales Return and Allowances	$7,500
	Cash		$7,500
	Merchandise Inventory	$4,800
	Cost of Goods Sold		$4,800
May 28	Sales Salaries Expense	$56,000
	Office Salaries Expense	$29,000
	Cash		$85,000
May 29	Store Supplies	$2,400
	Cash		$2,400
May 30	Accounts Receivables - Turner Co.	$78,750
	Sales		$78,750
	Cost of Goods Sold	$47,000
	Merchandise Inventory		$47,000
May 30	Cash [110,000*99% + 2,300]	$111,200
	Sales Discount (110,000*1%)	$1,100
	Accounts Receivables - Crescent Co.		$112,300
May 31	Accounts Payable - Osterman Co.	$83,000
	Cash [(88,000 - 5,000)*99%]		$82,170
	Merchandise Inventory [(88,000 - 5,000)*1%]		$830