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:

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.

Instructions

9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. Insert the new balance in the owner's capital account.

Part 1)

The journal entries are as follows:

Date	Account Titles	Debit	Credit
May 01	Rent Expense	$5,000
	Cash		$5,000
May 03	Merchandise Inventory	$36,000
	Accounts Payable - Martin Co.		$36,000
May 04	Merchandise Inventory (Freight)	$600
	Cash		$600
May 06	Accounts Receivables - Korman Co.	$68,500
	Sales		$68,500
	Cost of Goods Sold	$41,000
	Merchandise Inventory		$41,000
May 07	Cash	$22,300
	Accounts Receivables - Halstad Co.		$22,300
May 10	Cash	$54,000
	Sales		$54,000
	Cost of Goods Sold	$32,000
	Merchandise Inventory		$32,000
May 13	Accounts Payable - Martin Co.	$36,000
	Cash (36,000*98%)		$35,280
	Merchandise Inventory (36,000*2%)		$720
May 15	Advertising Expense	$11,000
	Cash		$11,000
May 16	Cash (68,500*98%)	$67,130
	Sales Discount (68,500*2%)	$1,370
	Accounts Receivables - Korman Co.		$68,500
May 19	Merchandise Inventory	$18,700
	Cash		$18,700
May 19	Accounts Payable - Buttons Co.	$33,450
	Cash		$33,450
May 20	Sales Return and Allowances	$13,230
	Cash		$13,230
	Merchandise Inventory	$8,000
	Cost of Goods Sold		$8,000
May 20	Accounts Receivables - Crescent Co.	$1,10,000
	Sales		$1,10,000
	Cost of Goods Sold	$70,000
	Merchandise Inventory		$70,000
May 21	Accounts Receivables - Crescent Co.	$2,300
	Cash		$2,300
May 21	Cash	$42,900
	Accounts Receivables - Gee Co.		$42,900
May 21	Merchandise Inventory	$88,000
	Accounts Payable - Osterman Co.		$88,000
May 24	Accounts Payable - Osterman Co.	$5,000
	Merchandise Inventory		$5,000
May 26	Sales Return and Allowances	$7,500
	Cash		$7,500
	Merchandise Inventory	$4,800
	Cost of Goods Sold		$4,800
May 28	Sales Salaries Expense	$56,000
	Office Salaries Expense	$29,000
	Cash		$85,000
May 29	Store Supplies	$2,400
	Cash		$2,400
May 30	Accounts Receivables - Turner Co.	$78,750
	Sales		$78,750
	Cost of Goods Sold	$47,000
	Merchandise Inventory		$47,000
May 30	Cash [110,000*99% + 2,300]	$111,200
	Sales Discount (110,000*1%)	$1,100
	Accounts Receivables - Crescent Co.		$112,300
May 31	Accounts Payable - Osterman Co.	$83,000
	Cash [(88,000 - 5,000)*99%]		$82,170
	Merchandise Inventory [(88,000 - 5,000)*1%]		$830