Question
Comprehensive Problem 2 Part 1 and Part 2: Palisade Creek Co. is a merchandising business. The account balances for Palisade Creek Co. as of May
Comprehensive Problem 2 Part 1 and Part 2:
Palisade Creek Co. is a merchandising business. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows:
| 110 | Cash | $83,600 |
| 112 | Accounts Receivable | 233,900 |
| 115 | Merchandise Inventory | 624,400 |
| 116 | Estimated Returns Inventory | 28,000 |
| 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 | Salaries Payable | |
| 212 | Customers Refunds Payable | 50,000 |
| 310 | Lynn Tolley, Capital, June 1, 2015 | 685,300 |
| 311 | Lynn Tolley, Drawing | 135,000 |
| 312 | Income Summary | |
| 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, 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, 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.
For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".
May 1: Paid rent for May, $5,000.
| Description | Post. Ref. | Debit | Credit |
| Rent Expense |
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| Cash |
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May 3: Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.
| Description | Post. Ref. | Debit | Credit |
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May 4: Paid freight on purchase of May 3, $600.
| Description | Post. Ref. | Debit | Credit |
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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 |
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May 7: Received $22,300 cash from Halstad Co. on account.
| Description | Post. Ref. | Debit | Credit |
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May 10: Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.
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May 13: Paid for merchandise purchased on May 3.
| Description | Post. Ref. | Debit | Credit |
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May 15: Paid advertising expense for last half of May, $11,000.
| Description | Post. Ref. | Debit | Credit |
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May 16: Received cash from sale of May 6.
| Description | Post. Ref. | Debit | Credit |
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May 19: Purchased merchandise for cash, $18,700.
| Description | Post. Ref. | Debit | Credit |
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May 19: Paid $33,450 to Buttons Co. on account.
| Description | Post. Ref. | Debit | Credit |
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May 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.
| Description | Post. Ref. | Debit | Credit |
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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 |
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May 21: For the convenience of Crescent Co., paid freight on sale of May 20, $2,300.
| Description | Post. Ref. | Debit | Credit |
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May 21: Received $42,900 cash from Gee Co. on account.
| Description | Post. Ref. | Debit | Credit |
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May 21: Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000.
| Description | Post. Ref. | Debit | Credit |
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May 24: Returned of damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.
| Description | Post. Ref. | Debit | Credit |
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May 26: Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800.
| Description | Post. Ref. | Debit | Credit |
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May 28: Paid sales salaries of $56,000 and office salaries of $29,000.
| Description | Post. Ref. | Debit | Credit |
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May 29: Purchased store supplies for cash, $2,400.
| Description | Post. Ref. | Debit | Credit |
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May 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.
| Description | Post. Ref. | Debit | Credit |
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May 30: Received cash from sale of May 20 plus freight paid on May 21.
| Description | Post. Ref. | Debit | Credit |
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May 31: Paid for purchase of May 21, less return of May 24.
| Description | Post. Ref. | Debit | Credit |
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2.
Comprehensive Problem 2 Part 3:
NOTE: You must complete parts 1 and 2 before completing part 3.
Prepare an unadjusted trial balance. If an amount box does not require an entry, leave it blank.
| Palisade Creek Co. Unadjusted Trial Balance May 31, 2016 | ||
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| Debit | Credit |
| Cash |
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| Accounts Receivable |
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| Merchandise Inventory |
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| Estimated Returns Inventory |
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| Prepaid Insurance |
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| Store Supplies |
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| Store Equipment |
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| Accumulated DepreciationStore Equipment |
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| Accounts Payable |
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| Salaries Payable |
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| Customers Refunds Payable |
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| Lynn Tolley, Capital |
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| Lynn Tolley, Drawing |
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| Sales |
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| Cost of Merchandise Sold |
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| Sales Salaries Expense |
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| Advertising Expense |
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| Depreciation Expense |
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| Store Supplies Expense |
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| Miscellaneous Selling Expense |
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| Office Salaries Expense |
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| Rent Expense |
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| Insurance Expense |
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| Miscellaneous Administrative Expense |
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Accounting What the Numbers Mean
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
9th Edition
978-0-07-76261, 0-07-762611-7, 9780078025297, 978-0073527062
