Palisade Creek Co. is a merchandising business that uses the perpetual inventory
ID: 2599532 • 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, 2018, are as follows: Assume all accounts have normal balances.
110 Cash $ 83,600
112 Accounts receivable 233,900
115 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 goods 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:
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 goods 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 goods 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.
May 20 Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,000. The cost of the goods 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 goods 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.
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). A. Inventory on May 31, $570,000 B. Insurance expired during the year, $12,000 C. Store supplies on hand on May 31, $4,000 D. Depreciation for the current year, $14,000 E. Accrued salaries on May 31: Sales salaries, $7,000 Office salaries, $6,600 Total accrued salaries: $13,600 F. The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of goods sold.
6. A. Journalize the adjusting entries.
7. Prepare an adjusted trial balance. Accounts with zero balances can be left blank.
Explanation / Answer
Journal
Since question on board involved large number of journal entries, due to constraint oof time it is not possible for an expert to answer further. Sorry for the inconvenience.
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DATE PARTICULAR L.F DR. CR. 1/5 Rent A/c Dr. 5000 To cash 5000 ( Being Rent for May paid) 3/5 Purchase A/c Dr. 36000 To Martin Co. 36000 ( Being purchases made) 4/5 Freight A/c Dr. 600 To cash 600 (Being Freight exp paid) 6/5 korman 68500 To sales 68500 (Being sales made on account) 7/5 cash 22300 To Halstad co. 22300 (Being payment received) 10/5 cash a/c Dr. 54000 To sales 54000 ( Being Cash sales made) 13/5 Martin Co. 36000 To Cash 35280 To Disct 720 (Being payment made and discount received) 15/5 Advertisement exp 11000 To cash 11000 (Being advertisement exp paid) 16/5 Cash A/c Dr. 67130 Disct A/c Dr. 1370 To Korman 68500 (Being payment received and disct allowed) 19/5 Purchase 18700 To Cash 18700 (Being Cash purchases made) 19/5 Buttons A/c Dr. 33450 To Cash 33450 (Being payment made) 20/5 Sales Return a/c Dr. 13230 To Cash 13230 (Being refund paid on returns to Korman) 20/5 Cresent A/c Dr. 110000 To sales 110000 ( Being sales made on account ) 21/5 Freight a/c Dr. 2300 To cash 2300 (Being Freight paid) Cresent a/c Dr. 2300 To Freight a/c 2300 (Being Freight recoverable from Cresent as it was paid on its behalf) 21/5 Purchases A/c Dr 88000 To Osterman 88000 (Being purchases made on account) 24/5 Osterman 5000 To Purchase Retur 5000 ( Being goods returned) 26/5 Sales Return 7500 To cash 7500 (Being refund made on returns of cash sales) 28/5 Sales Salaries A/c Dr 56000 Office Salaries a/c Dr. 29000 To Cash 85000 (Being Salaries paid) 29/5 Store Supplies 2400 To Cash 2400 (Being store Supplies purchased) 30/5 Turner Co 78750 To sales 78750 ( Being sales made on account) 30/5 Cash A/c Dr. 10890 Disct A/c Dr. 1100 To Cresent a/c 13300 ( Being payment received after allowing disct) 31/5 Osterman a/c Dr 83000 To Cash 82170 To Disct 8300 (Being payment made)Related Questions
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