Comprehensive Problem 2 Part 1 and Part 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, 20Y7 (unless otherwise indicated), are as follows:

110	Cash	$83,600
112	Accounts Receivable	233,900
115	Merchandise Inventory	652,400
117	Prepaid Insurance	16,800
118	Store Supplies	11,400
123	Store Equipment	569,500
124	Accumulated DepreciationStore Equipment	56,700
210	Accounts Payable	96,600
211	Customer Refunds Payable	50,000
212	Salaries Payable
310	Lynn Tolley, Capital, June 1, 20Y6	685,300
311	Lynn Tolley, Drawing	135,000
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

Part 1: Using the attached spreadsheet, journalize the transactions for May, the last month of the fiscal year, below.

Part 2: Post the journal to the general ledger you created in Part 1, 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.

If an amount box does not require an entry, leave it blank.

May 1: Paid rent for May, $5,000.

Description	Post. Ref.	Debit	Credit
Accounts PayableCashCost of Merchandise SoldRent ExpenseSupplies Expense		fill in the blank 2	fill in the blank 3
Accounts PayableCashMerchandise InventoryRent ExpenseSales		fill in the blank 5	fill in the blank 6

May 3: Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.

Description	Post. Ref.	Debit	Credit
Accounts PayableCashCost of Merchandise SoldMerchandise InventoryService Revenue		fill in the blank 14	fill in the blank 15
Accounts PayableCashCost of Merchandise SoldMerchandise InventorySales		fill in the blank 17	fill in the blank 18

May 4: Paid freight on purchase of May 3, $600.

May 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.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Korman Co.Accounts Receivable-Korman Co.CashSalesService Revenue		fill in the blank 20	fill in the blank 21
Accounts Payable-Korman Co.Accounts Receivable-Korman Co.CashSalesService Revenue		fill in the blank 23	fill in the blank 24
CashCost of Merchandise SoldMerchandise InventorySalesService Revenue		fill in the blank 26	fill in the blank 27
Accounts ReceivableCashCost of Merchandise SoldMerchandise InventoryService Revenue		fill in the blank 29	fill in the blank 3

May 7: Received $22,300 cash from Halstad Co. on account.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Halstad Co.Accounts Receivable-Halstad Co.CashService RevenueSales		fill in the blank 32	fill in the blank 33
Accounts Payable-Halstad Co.Accounts Receivable-Halstad Co.CashService RevenueSales		fill in the blank 35	fill in the blank 36

May 10: Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Korman Co.Accounts Receivable-Korman Co.CashService RevenueSales		fill in the blank 38	fill in the blank 39
Accounts Payable-Korman Co.Accounts Receivable-Korman Co.CashService RevenueSales		fill in the blank 41	fill in the blank 42
CashCost of Merchandise SoldMerchandise InventorySalesService Revenue		fill in the blank 44	fill in the blank 45
Accounts ReceivableCashCost of Merchandise SoldMerchandise InventoryService Revenue		fill in the blank 47	fill in the blank 48

May 13: Paid for merchandise purchased on May 3.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Martin Co.Accounts Receivable-Martin Co.Merchandise InventoryService RevenueStore Supplies Expense		fill in the blank 50	fill in the blank 51
Accounts Payable-Martin Co.Accounts Receivable-Martin Co.CashCost of Merchandise SoldStore Equipment		fill in the blank 53	fill in the blank 54

May 15: Paid advertising expense for last half of May, $11,000.

Description	Post. Ref.	Debit	Credit
Accounts PayableAdvertising ExpenseCashService RevenueStore Supplies Expense		fill in the blank 56	fill in the blank 57
Advertising ExpenseAccounts PayableCashMerchandise InventoryStore Supplies		fill in the blank 59	fill in the blank 6

May 16: Received cash from sale of May 6.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Korman Co.Accounts Receivable-Korman Co.CashCost of Merchandise SoldStore Supplies		fill in the blank 62	fill in the blank 63
Accounts Payable-Korman Co.Accounts Receivable-Korman Co.CashCost of Merchandise SoldMerchandise Inventory		fill in the blank 65	fill in the blank 66

May 19: Purchased merchandise for cash, $18,700.

Description	Post. Ref.	Debit	Credit
Accounts PayableCashCost of Merchandise SoldMerchandise InventoryService Revenue		fill in the blank 68	fill in the blank 69
Accounts PayableCashCost of Merchandise SoldMerchandise InventorySales		fill in the blank 71	fill in the blank 72

May 19: Paid $33,450 to Buttons Co. on account.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Buttons Co.Accounts Receivable-Buttons Co.CashSalesService Revenue		fill in the blank 74	fill in the blank 75
Accounts Payable-Buttons Co.Accounts Receivable-Buttons Co.CashSalesService Revenue		fill in the blank 77	fill in the blank 78

May 20: Paid Korman Co. a cash refund of $5,000 for damaged merchandise from sale of May 6. Korman Co. kept the merchandise.

Description	Post. Ref.	Debit	Credit
Customer Refund PayableCustomers Refunds ReceivableCashService RevenueSales		fill in the blank 80	fill in the blank 81
Accounts Payable-Crescent Co.Accounts Receivable-Crescent Co.CashService RevenueSales		fill in the blank 83	fill in the blank 84

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.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Crescent Co.Accounts Receivable-Crescent Co.CashService RevenueSales		fill in the blank 86	fill in the blank 87
Accounts Payable-Crescent Co.Accounts Receivable-Crescent Co.CashService RevenueSales		fill in the blank 89	fill in the blank 90
CashCost of Merchandise SoldMerchandise InventorySalesService Revenue		fill in the blank 92	fill in the blank 93
Accounts ReceivableCashCost of Merchandise SoldMerchandise InventoryService Revenue		fill in the blank 95	fill in the blank 96

May 21: Received $42,900 cash from Gee Co. on account.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Gee Co.Accounts Receivable-Gee Co.CashService RevenueSales		fill in the blank 104	fill in the blank 105
Accounts Payable-Gee Co.Accounts Receivable-Gee Co.CashService RevenueSales		fill in the blank 107	fill in the blank 108

May 24: Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.

Description	Post. Ref.	Debit	Credit
Accounts Payable-Osterman Co.Accounts Receivable-Osterman Co.CashMerchandise InventoryService Revenue		fill in the blank 116	fill in the blank 117
Accounts Payable-Osterman Co.Accounts Receivable-Osterman Co.CashMerchandise InventoryService Revenue		fill in the blank 119	fill in the blank 120

May 26: Refunded cash on sales made for cash, $800. The defective merchandise was not returned by the customer.

Description	Post. Ref.	Debit	Credit
CashCustomer Refund PayableMerchandise InventorySalesService Revenue		fill in the blank 122	fill in the blank 123
CashCustomer Refund PayableMerchandise InventorySalesService Revenue		fill in the blank 125	fill in the blank 126

May 28: Paid sales salaries of $56,000 and office salaries of $29,000.

Description	Post. Ref.	Debit	Credit
CashCost of Merchandise SoldSalaries PayableSales Salaries ExpenseStore Supplies		fill in the blank 128	fill in the blank 129
Accounts PayableCashLynn Tolley, DrawingMerchandise InventoryOffice Salaries Expense		fill in the blank 131	fill in the blank 132
CashLynn Tolley, CapitalLynn Tolley, DrawingSales Salaries ExpenseSalaries Payable		fill in the blank 134	fill in the blank 135

May 29: Purchased store supplies for cash, $2,400.

Description	Post. Ref.	Debit	Credit
Accounts ReceivableCashCost of Merchandise SoldService RevenueStore Supplies		fill in the blank 137	fill in the blank 138
Accounts PayableCashCost of Merchandise SoldService RevenueStore Supplies		fill in the blank 140	fill in the blank 141