Palisade Creek Co. is a merchandising business that uses the perpetual inventory
ID: 2446747 • 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:
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
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.
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 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. 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.
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.
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Explanation / Answer
Answer:
Note: Credit is in (-) sign and Debit is in (+) sign.
Accounts Amount $ Rent Paid Purchase Freight Sale Cash Receipt Cash Sale Payment Advertisement Cash collection Cash Purchase Payment Sale Return Sale Freight Cash collection Purchase Purchase Return Sales Return Expenses Store Supplies Sale Cash collection Payment Adjustment Inventory Adjustment Insurance Adjustment Store Depreciation Salary Payable Customer allowance Ending Balance $ 110 Cash $ 83,600 -5000 -600 22300 54000 -35280 -11000 67130 -18700 -33450 -13230 -2300 42900 -7500 -85000 -2400 110100 -81340 84,230 112 Accounts Receivable 233,900 68500 -22300 -68500 110000 -42900 78750 -110000 -60000 187,450 115 Merchandise Inventory 624,400 36000 -41000 -32000 18700 8000 -70000 88000 -5000 4800 -47000 -14900 570,000 116 Estimated Returns Inventory 28,000 35000 63,000 117 Prepaid Insurance 16,800 -5000 11,800 118 Store Supplies 11,400 2400 -9800 4,000 123 Store Equipment 569,500 569,500 124 Accumulated Depreciation-Store Equipment -56,700 -5833 (62,533) 210 Accounts Payable -96,600 -36000 36000 33450 -88000 5000 83000 (63,150) 211 Salaries Payable — 0 -13600 (13,600) 212 Customers Refunds Payable -50,000 (50,000) 310 Common Stock -100,000 (100,000) 311 Retained Earnings -585,300 (585,300) 312 Dividends 135,000 135,000 313 Income Summary — - 410 Sales -5,069,000 -68500 -54000 1370 13500 -110000 7500 -78750 2200 60000 (5,295,680) 510 Cost of Merchandise Sold 2,823,000 41000 32000 -720 -8000 70000 -4800 47000 -1660 14900 -35000 2,977,720 520 Sales Salaries Expense 664,800 56000 7000 727,800 521 Advertising Expense 281,000 11000 292,000 522 Depreciation Expense — 5833 5,833 523 Store Supplies Expense — 600 9800 10,400 529 Miscellaneous Selling Expense 12,600 -270 2300 -2300 12,330 530 Office Salaries Expense 382,100 29000 6600 417,700 531 Rent Expense 83,700 5000 88,700 532 Insurance Expense — 5000 5,000 539 Miscellaneous Administrative Expense 7,800 7,800 Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -Related Questions
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