Palisade Creek Co. is a merchandising business that uses the perpetual inventory
ID: 2446744 • 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:
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.
Paid for purchase of May 21, less return of May 24.
Instructions: Prepare an adjusting entry 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 7,800Explanation / Answer
Date
Title of Account
Debit
Credit
Closing Inventory
570000
Income Statement
570000
Prepaid Insurance
4800
Insurance Expenses
4800
Supplies Inventory
4000
Income Statement
4000
Depreciation
14000
Accumulated Depreciation
14000
Salaries
13600
Accrued Salaries
13600
Customers Returns and Allowances
60000
Customer Returns payables
60000
Income Statement
35000
Cost of Merchandise Sold
35000
Date
Title of Account
Debit
Credit
Closing Inventory
570000
Income Statement
570000
Prepaid Insurance
4800
Insurance Expenses
4800
Supplies Inventory
4000
Income Statement
4000
Depreciation
14000
Accumulated Depreciation
14000
Salaries
13600
Accrued Salaries
13600
Customers Returns and Allowances
60000
Customer Returns payables
60000
Income Statement
35000
Cost of Merchandise Sold
35000
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