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 as of May 1, 2018, are as follows. Assume all accounts have normal balances.

110		Cash	$83,600			312		Dividends	$135,000
112		Accounts Receivable	233,900			313		Income Summary
115		Inventory	624,400			410		Sales	5,069,000
116		Estimated Returns Inventory	28,000			510		Cost of Goods Sold	2,823,000
117		Prepaid Insurance	16,800			520		Sales Salaries Expense	664,800
118		Store Supplies	11,400			521		Advertising Expense	281,000
123		Store Equipment	569,500			522		Depreciation Expense
124		Accumulated Depreciation Store Equipment	56,700			523		Store Supplies Expense
210		Accounts Payable	96,600			529		Miscellaneous Selling Expense	12,600
211		Salaries Payable				530		Office Salaries Expense	382,100
212		Customers Refunds Payable	50,000			531		Rent Expense	83,700
310		Common Stock	100,000			532		Insurance Expense
311		Retained Earnings	585,300			539		Miscellaneous Administrative Expense	7,800

Part 1: Journalize the transactions below for May, the last month of the fiscal year. For a compound transaction, if an amount box does not require an entry, leave it blank.

Part 2: Using the attached spreadsheet, post the journal entries from Part 1 to the general ledger. Extend 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.

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

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.

Comprehensive Problem 2 Part 4 and 6:

Note: You must complete parts 1, 2 and 3 before attempting to complete part 4 and part 6. Part 5 is an optional work sheet.

4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete Part 6.

a.		Inventory on May 31				$570,000
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

f. The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of goods sold.

6. Journalize the adjusting entries. For a compound transaction, if an amount box does not require an entry, leave it blank. Post the adjusting entries to the attached spreadsheet you used in parts 1 and 2.

Comprehensive Problem 2 Part 5: Optional work sheet

Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet using the following adjustment data.

a.		Inventory on May 31				$570,000
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

f. The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of goods sold.

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

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, 2018 Debit Credit Cash Accounts Recelvable Inventory Estimated Returns Inventory Prepaid Insurance Store Supplies Store Equipment Accumulated Depreciation-Store Equipment Accounts Payable Salaries Payable 84,500 223,900