Palisade Creek Co. is a merchandising business that uses the perpetual inventory
ID: 2469250 • 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 112 Accounts Receivable 115 Merchandise Inventory 116 Estimated Returns Inventory 117 Prepaid Insurance 118 Store Supplies 123 Store Equipment 124 Accumulated Depreciation-Store Equipment 210 Accounts Payable 211 Salaries Payable 212 Customers Refunds Payable 310 Lynn Tolley, Capital, June 1, 2015 311 Lynn Tolley Drawing 312 income Summary 410 Sales 510 Cost of Merchandise Sold 520 Sales Salaries Expense 521 Advertising Expense 522 Depreciation Expense 523 Store Supplies Expense 529 Miscellaneous Selling Expense 530 Office Salaries Expense 531 Rent Expense 532 Insurance Expense 539 Miscellaneous Administrative Expense $ 83,600 233,900 624,400 28,000 16,800 11,400 569,500 56,700 96,600 50,000 685,300 135,000 5,069,000 664,800 281,000 12,600 382,100 83,700 ,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 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. hscovnied 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. Record the following transactions on Page 21 of the journal 20. Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,000. The cost of the mercñandise 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. Continued)Explanation / Answer
(1)
May 1 Rent Dr.$5000
To cash $5000
3 Mechandise inventory Dr.$36000
To martin Co. $36000
4 Merchandise Inventory Dr.$600
To cash $600
6 Korman Co. Dr $68500
Cost of goods sold Dr.$41000
To sale $68500
To Mechandise inventory $41000
7 cash Dr.$22300
To Halstad Co. $22300
10 Cash Dr.$54000
Cost of goods sold Dr.$32000
To Sale $54000
To Merchandise inventory $32000
13 Martin Co, Dr.$36000
To Merchandise inventory(36000*2%) $720
To cash $ 35280
15 Advertising expense Dr.$11000
To cash $11000
16 Cash Dr.$67130
sale disocunt Dr.$1370
To Korman &Co.(68500) 68500
( cash recieved after discount =2% *68500 = $1370)
19 Merchandise inventory Dr.$18700
To cash $18700
19 Button Co. Dr.$33450
To cash $33450
20 Korman &Co. Dr.13500
Merchandise Inventory Dr.$8000
To cash 13230
To Disocunt allowed(13500 *2%) 270
To Cost of goods sold $8000
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