284 Chapter 5| Accounting for Merchandising Businesses Comprehensive Problem 2 8. Net profit: Palisade Creek Co. is a merchandising business. The account balances for Palisade Creek $762,500 Co. as of May 1, 2014 (unless otherwise indicated), are as follows: 110 Cash $ 83,600 112 Accounts Receivable 233,900 602,400 115 Inventory 16,800 116 Prepaid Insurance 11,400 117 Store Supplies 123 Store Equipment 569,500 Accumulated Depreciation-Store Equipment 56,700 124 96,600 210 Accounts Payable 211 Salaries Payable 310 Share Capital-Ordinary 100,000 311 Retained Earnings 585,300 312 Dividends 135,000 313 Income Summary 410 Sales 5,221,100 417 Sales Returns and Allowances 92,700 412 Sales Discounts 59400 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. fold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of goods sold was $41,000. 7. Received $22,300 cash from Halstad Co. on account, no discount. 10. Sold merchandise for cash, $54,000. The cost of goods sold was $32,000. 13. Paid for merchandise purchased on May 3, less discount. 14. Received merchandise returned on sale of May 6, $13,500. The cost of the merchandise returned was $8,000. 15. Paid advertising expense for last half of May, $11,000. 16. Received cash from sale of May 6, less return of May 14 and discount. 19. Purchased merchandise for cash, $18,700. 19. Paid $33,450 to Buttons Co. on account, no discount.Chapter 5|Accounting for Merchandising Businesses 285 Record the following transactions on Page 21 of the journal. May 20. Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110.000. The cost of 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, no discount. 21. Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000. 24. Returned $5,000 of damaged merchandise purchased on May 21, receiving credit from the seller. 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 goods sold was $47,000. 30. Received cash from sale of May 20, less discount, plus freight paid on May 21. 31. Paid for purchase of May 21, less return of May 24 and discount. Instructions 1. Enter the bahmees of each of the accounts in the appropriate balance column of a A Waite Balance in the item section, and place a check mark () in the Posting Reference coleman. Journalize the transactions for July, starting on Page 20 of the journal 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 $550,000 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 13,600 5. (Optional Inter hosted trai balanes shoot /works 10 solomon end of period spread- spreadoncet. 6. Journalize and post the adjusting entries. Record the adjusting entries the journal. Page 22 of 7. Prepare an adjusted trial balance. 8. Prepare a statement of comprehensive income, a retained earnings statement, and a statement of financial position. 9. Prepare and post the closing entries. Record the closing entries on Page 25 of the journal Indicate closed accounts by inserting a line in both the Belanes columns opposite the closing entry losest the new balance in the retained earnings account. 10. Prepare a post-closing trial balance