6-6i Comprehensive Problem 2 Palisade Creek Co. is a merchandising business that

Question

6-6i Comprehensive Problem 2

Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2019 (unless otherwise indicated), are as follows:

During May, the last month of the fiscal year, the following transactions were completed:

Instructions

1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section and place a check mark (¸) in the Posting Reference column. Journalize the transactions for May, starting on Page 20 of the journal.

Part 1)

The journal entries are as follows:

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. 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 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.

Explanation / Answer

Cash Accounts receivable Merchandise inventory Date Details Ref Balance Date Details Ref Balance Date Details Ref Balance Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Apr.30 83600 Apr.30 233900 Apr.30 624400 May.1 5000 78600 May.6 68500 302400 May.3 36000 660400 May.4 600 78000 May.7 22300 280100 May.4 600 661000 May.7 22300 100300 May.16 68500 211600 May.6 41000 620000 May.10 54000 154300 May.20 110000 321600 May.10 32000 588000 May.13 35280 119020 May.21 2300 323900 May.13 720 587280 May.15 11000 108020 May.21 42900 281000 May.17 18700 605980 May.16 67130 175150 May.30 78750 359750 May.20 70000 535980 May.19 18700 156450 May.30 112300 247450 May.20 8000 543980 May.19 33450 123000 247450 May.21 88000 631980 May.20 13230 109770 May.24 5000 626980 May.21 2300 107470 May.26 4800 631780 May.21 42900 150370 May.30 47000 584780 May.26 7500 142870 Prepaid insurance may.31 830 583950 May.28 85000 57870 Date Details Ref Balance May.29 2400 55470 Debit Credit Debit Credit Stores supplies May.30 111200 166670 Apr.30 16800 Date Details Ref Balance May.31 82170 84500 16800 Debit Credit Debit Credit 16800 Apr.30 11400 Estimated return inventory May.29 2400 13800 Date Details Ref Balance 13800 Debit Credit Debit Credit 13800 Apr.30 28000 13800 28000 Accumulated depreciation - stores equipment Accounts payable Date Details Ref Balance Date Details Ref Balance Stores equipment Debit Credit Debit Credit Debit Credit Debit Credit Date Details Ref Balance Apr.30 56700 Apr.30 96600 Debit Credit Debit Credit 56700 May.3 36000 132600 Apr.30 569500 56700 May.13 36000 96600 569500 May.19 33450 63150 569500 May.21 88000 151150 Salaries payable May.24 5000 146150 Date Details Ref Balance May.31 83000 63150 Debit Credit Debit Credit Customer refunds payable Apr.30 Lynn Tolley , Capital Date Details Ref Balance 0 Date Details Ref Balance Debit Credit Debit Credit 0 Debit Credit Debit Credit Apr.30 50000 0 Apr.30 685300 50000 685300 50000 685300 50000 Sales Date Details Ref Balance Debit Credit Debit Credit Cost of merchandise sold Lynn Tolley , Drawings Apr.30 5069000 Date Details Ref Balance Date Details Ref Balance May.6 68500 5137500 Debit Credit Debit Credit Debit Credit Debit Credit May.10 54000 5191500 Apr.30 2823000 Apr.30 135000 May.20 110000 5301500 May.6 41000 2864000 May.30 78750 5380250 May.10 32000 2896000 5380250 May.20 70000 2966000 May.20 8000 2958000 May.26 4800 2953200 Advertising expense May.30 47000 3000200 Sales salaries expense Date Details Ref Balance Date Details Ref Balance Debit Credit Debit Credit Debit Credit Debit Credit Apr.30 281000 Depreciation expense Apr.30 664800 May.15 11000 292000 Date Details Ref Balance May.28 56000 720800 292000 Debit Credit Debit Credit 720800 292000 Apr.30 720800 0 0 Miscellaneous selling expense Stores supplies expense Date Details Ref Balance Date Details Ref Balance Debit Credit Debit Credit Office salaries expense Debit Credit Debit Credit Apr.30 12600 Date Details Ref Balance Apr.30 12600 Debit Credit Debit Credit 0 12600 Apr.30 382100 0 12600 May.29 29000 411100 411100 411100 Rent expense Insurance expense Date Details Ref Balance Date Details Ref Balance Debit Credit Debit Credit Debit Credit Debit Credit Miscellaneous administrative expense Apr.30 83700 Apr.30 Date Details Ref Balance May.1 5000 88700 0 Debit Credit Debit Credit 88700 0 Apr.30 7800 88700 7800 7800 Sales returns and allowances 7800 Sales discount Date Details Ref Balance Date Details Ref Balance Debit Credit Debit Credit Debit Credit Debit Credit Apr.30 0 Apr.30 0 May.20 13230 13230 May.16 1370 1370 May.26 7500 20730 May.30 1100 2470

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