Comprehensive Problem 2 Part 1 and Part 2: Palisade Creek Co. is a retail business that uses the perpetual inventory system. The account balances for Palisade Creek as of May 1, 20Y6 (unless otherwise indicated), are as follows. Assume all accounts have normal balances. 110 Cash 583,600 312 Dividends $135,000 112 Accounts Receivable 233,900 410 Sales 5,069,000 115 Inventory 624,400 510 Cost of Goods Sold 2,823,000 116 Estimated Returns Inventory 28,000 520 Sales Salaries Expense 664,800 117 Prepaid Insurance 16,800 521 Advertising Expense 281,000 118 Store Supplies 11,400 522 Depreciation Expense 123 Store Equipment 569,500 523 Store Supplies Expense 124 Accumulated Depreciation-Store Equipment 56,700 529 Miscellaneous Selling Expense 12,600 210 Accounts Payable 96,600 530 Office Salaries Expense 211 Salaries Payable 531 Rent Expense 83,700 212 Customers Refunds Payable 50,000 532 Insurance Expense 310 Common Stock 100,000 539 Miscellaneous Administrative Expense 7,800 311 Retained Earnings 585,300 539 Part 1: Journalize the transactions below for May, the last month of the fiscal year. If an amount box does not require an entry, leave it blank. 382,100 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 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. 1. Prepare a multiple-step income statement. Palisade Creek Co. Income Statement For the Year Ended May 31, 2016 Sales 5,316, 205 Cost of goods sold Gross profit Operating Expenses: Selling expenses: Sales salaries expense Advertising expense 727,800 292,000 Depreciation expense 14,000 9,800 12,600 Store supplies expense Miscellaneous selling expense Total selling expenses Administrative expenses: Office salaries expense $ 1,056,200 417,700 Rent expense 88,700 Insurance expense 12,000 7,800 526,200 Miscellaneous administrative expense Total administrative expenses Total operating expenses Net income 1,582,400 S 2. Prepare a statement of stockholders' equity. Assume that additional common stock of $10,000 was issued in January 20Y6. Palisade Creek Co. Statement of Stockholders' Equity For the Year Ended May 31, 2016 Common Stock Retained Earnings Total Balances, June 1, 2015 Balances, May 31, 2016 3. Prepare a balance sheet. Palisade Creek Co. Balance Sheet May 31, 2016 Assets Current assets: Cash 84,500 245,875 570,000 Accounts receivable Inventory Estimated returns inventory Prepaid insurance 50,200 4,800 4,000 959,375 Store supplies Total current assets Property, plant, and equipment: Store equipment Accumulated depreciation-store equipment 569,500 -70,700 Total property, plant, and equipment 498,800 Total assets 1,458,175 Liabilities 63,150 Current liabilities: Accounts payable Salaries payable Customers refunds payable Total liabilities 13,600 89,270 Stockholders' Equity Common stock Retained earnings Total stockholders' equity 1,292,155 Total liabilities and Stockholders' Equity 1,458,175 You must complete parts 1, 2, 3, 4, 6, 7, 8 and 9 before attempting to complete part 10. Part 5 is optional. Prepare a post-closing trial balance. If an amount box does not require an entry, leave it blank. Palisade Creek Co. Post-Closing Trial Balance May 31, 2016 Debit Credit Cash 84,500 245,875 Accounts Receivable Inventory 570,000 Estimated Returns Inventory 50,200 Prepaid Insurance 4,800 Store Supplies 11,400 X 569,500 Store Equipment Accumulated Depreciation Store Equipment Accounts Payable 70,700 63,150 Salaries Payable 13,600 89,270 Customers Refunds Payable Common Stock 100,000 Retained Earnings 1,194,555 X 1,531,275 x 1,531,275 x