Palisade Creek Co. is a merchandising business that uses the perpetual inventory

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:

Journal Entries

5/1         Rent Expense    5000      

Cash                                      5000

5/3         Merchandise Expense   35280

Accounts payable                             35280

5/4         Merchandise Inventory 600

Cash                                                      600

5/6         Cost of Merchandise Sold             41000   

Merchandise Inventory                                 41000

5/6         Accounts Payable             67130

Sales                                                      67130

5/7         Cash      22300

                Accounts Receivable       22300

5/10       Cost of Merchandise Sold             32000

Merchandise Inventory                                 32000

5/10       Cash      4000

                Sales                      4000

5/13       Accounts Payable             35280

                Cash                                                      35280

5/15       Advertising Expense       11000

                Cash                                                      11000

5/16       Cash      67130

                Accounts Receivable       67130

5/19       Accounts Payable             33450

                Cash                                                      33450

5/19       Merchandise Inventory                 18700

                Cash                                                                      18700

5/19       Customer Refunds Payable          13230

                Cash                                                                      13230

5/20       Merchandise Inventory                 8000

                Estimated Returns Inventory                      8000

5/20       Accounts Receivable       108900

                Sales                                                      108900

5/20       Cost of Merchandise Sold             70000

Merchandise Inventory                                                 70000   

5/21       Accounts Receivable       2300

                Cash                                                      2300

5/21       Cash      42900

                Accounts Receivable                       42900   

5/21       Merchandise Inventory                 87120

                Accounts Payable                                             87120

5/24       Accounts Payable             4950

                Merchandise Inventory                 4950

5/26       Customer Refunds Payable          7500

                Cash                                                                      7500

5/28       Sales Salaries Expense                   56000

                Office Salaries Expense                                 56000

5/29       Store Supplies                   2400

                Cash                                                      2400

5/30       Accounts Receivable                       77175

                Sales                                                                      77175

5/30       Cash      111200

                Accounts Receivable       111200

5/30       Cost of Merchandise Sold             47000

                Merchandise Inventory                                 47000

5/30       Accounts Receivable       72300

                Cash                                                      72300

5/31       Accounts Payable             82170

                Cash                                                      82170

5/31       Store Supplies Expense 9800

                Store Expense                                   9800

5/31       Insurance Expense          12000

                Prepaid Expense                              12000

5/31       Depreciation Expense    1400

                Accumulated Depreciation-Store Equipment       1400

5/31       Sales Salaries Expense   7000

                Office Salaries Expense   6600

                Salaries Payable                                                13600

5/31       Cost of Merchandise Sold             78750

                Merchandise Inventory                                 78750

5/31       Estimated Returns Inventory      35000

                Cost of Merchandise Sold                             35000

5/3         Sales      60000   

                Customers Refunds Payable        60000

               

Instructions: Prepare a closing entries journal

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 7,800

Explanation / Answer

Closing entries

Debit Credit Income summary $4,541,550 To Rent expense $88,700 To COGS 3,056,750 To Sales and salaries expense 727,800 To Advertising expense 292,000 To Depreciation expense     1,400 To Store supplies expense     9,800 To Miscellneous selling expense    12,600 To Office salaries expense 332,700 To insurance expense 12,000 to Misc Administrative expense    7,800

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