Palisade Creek Co. is a merchandising business that uses the perpetual inventory
ID: 2446192 • Letter: P
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:
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.
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.
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 Common Stock 100,000 311 Retained Earnings 585,300 312 Dividends 135,000 313 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 7,800Explanation / Answer
(A) JOURNAL ENTRIES
Sr. No. Date Account names Debit Credit
1. May 1 DR Rent Expense $5,000
CR Cash $5,000
(To record rent for May paid)
2. May 3 DR Merchandise Inventory $36,000
CR Accounts Payable $36,000
(To record purchases on account)
3. May 4 DR Merchandise Inventory $600
CR Cash $600
(To record freight paid on merchandise purchase)
4. May 6 (a) DR Accounts Receivable $68,500
CR Sales $68,500
(To record sales made on account)
(b) DR Cost of Merchandise Sold $41,000
CR Merchandise Inventory $41,000
(To record cost of merchandise, sold on account)
5. May 7 DR Cash $22,300
CR Accounts Payable $22,300
(To record cash received on account)
6. May 10 (a) DR Cash $54,000
CR Sales $54,000
(To record cash sales)
(b) DR Cost of Merchandise Sold $32,000
CR Merchandise Inventory $32,000
(To record cost of merchandise sold)
7. May 13 DR Accounts Payable $36,000
CR Cash $35,280
CR Miscellaneous Selling Expense $720
(To record payment of purchases made on account, availing discount)
8. May 15 DR Advertising Expense $11,000
CR Cash $11,000
(To record advertising expense being paid)
9. May 16 DR Cash $67,130
DR Miscellaneous Selling Expense $1,370
CR Accounts Receivable $68,500
(To record payment for purchases made on account, discount allowed)
10. May 19 DR Merchandise Inventory $18,700
CR Cash $18,700
(To record purchases made for cash)
11. May 20 (a) DR Customers Refunds Payable $13,230
CR Cash $13,230
(To record refunds to customer being paid)
(b) DR Merchandise Inventory $8,000
CR Cost of Merchandise Sold $8,000
(To record cost of merchandise returned by customer)
12. May 20 (a) DR Accounts Receivable $110,000
CR Sales $110,000
(To record sales made on account)
(b) DR Cost of Merchandise Sold $70,000
CR Merchandise Inventory $70,000
(To record cost of merchandise, sold on account)
13. May 21 DR Accounts receivable $2,300
CR Cash $2,300
(To record freight paid on FOB shipping sales made, to be included within Receivables from customer)
14. May 21 DR Cash $42,900
CR Accounts Payable $42,900
(To record cash received on account)
15. May 21 DR Merchandise Inventory $88,000
CR Accounts Payable $88,000
(To record purchases made on account)
16. May 24 DR Accounts payable $5,000
CR Estimated Returns Inventory $5,000
(To record purchases return against credit memo)
17. May 26 (a) DR Customers Refunds Payable $7,500
CR Cash $7,500
(To record cash refund on sales)
(b) DR Merchandise Inventory $4,800
CR Cost of Merchandise Sold $4,800
(To record cost of sales returned)
18. May 28 DR Sales Salaries Expense $56,000
DR Office Salaries Expense $29,000
CR Cash $85,000
(To record salaries paid)
19. May 29 DR Store Supplies $2,400
CR Cash $2,400
(To record purchase of store supplies)
20. May 30 (a) DR Accounts Receivable $78,750
CR Sales $78,750
(To record sales made on account)
(b) DR Cost of Merchandise sold $47,000
CR Merchandise Inventory $47,000
(To record Cost of Merchandise sold on account)
21. May 30 DR Cash $111,200
DR Miscellaneous Selling Expense $1,100
CR Accounts Receivable $112,300
(To record cash received against on account sales including freight paid, discount allowed)
22. May 31 DR Accounts Payable $82,120
CR Cash $87,120
(To record payment for on account purchase net of discount ($87,120) less purchases returned).
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