Question
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
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
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