Continuing Problem Instructions

The Continuing Problem for Palisade Creek Co.. is in your book at the end of Chapter 5 on pages 280-281. We are going to complete instructions 1, 2, 4, 5, 6, 8, 9, and 10 on page 281.You should skip instructions 3 and 7 as those will be complete on the 10 column worksheet.This problem has you prepare the entries for the month of May 2016 transactions for Palisade Creek Co.The problem has you go through the adjusting entries,closing entries, worksheet, and financial statements. This problem brings together the complete, accounting cycle in one problem and is much like doing it in the "real world".

I will answer questions and help you with the problems. This is a learning experience and I want you to understand the problem and concepts.

Read the instructions on page281 including the following information:

Step 1: There are forms you can use set up the accounts for you. The forms are attached in a separate file. You will need to modify the forms to fit the information in this problem.

Step 2: Prepare the journal entries for the May1 through May 31 transactions. Now post the journal entries to the general ledger accounts (don't forget the post references).

Step 3: Post the journal entries to the general ledger,extending the month-end balances to the appropriate balance columns after all posting is completed (before adjusting entries are make).

Step 4: Prepare theTrial Balanceas of May 31 on a ten column work sheet listing all accounts, in order, from the general ledger accounts. Complete the work sheet using the adjusting entries shown on page 268 instruction # 4.

Step 5: Prepare the financial statements from the worksheet. (Multiple-step income statement, retained earnings, and report form balance sheet.)

Step 6: Journalize and post the adjusting entries.

Step 7: Prepare theclosing entriesin journal format. Now, post theclosing entriesto the general ledger accounts. Indicate closed accounts by inserting a line in both balance columns opposite the closing entry. Insert the new balance in the retained earnings account.

Step 8: Prepare the Post-ClosingTrial Balancefrom the general ledger accounts. You do not have to enter accounts with a zero balance.

The problem will be due on April 16th, by 11:55 PM..It will count as 20% of your final grade. Any problems turned in late will have 5 points per day deducted from the grade. After the third day the grade is zero on the comprehensive problem.

CHECK FIGURES:

NetIncome..............................................$741,855

TotalAssets.............................................$1,458,175 (Balance Sheet)

Worksheet -totalTrial BalanceColumn........$6,210,625 (Unadjusted)

Total for the adjustments..........................$158,350

Total for the AdjustedTrial Balancecolumns..$6,238,225

Post ClosingTrial Balance..........................$1,528,875

Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek as of May 1, 2018 (unless otherwise indicated), are as follows: 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 28,000 510 Cost ofGoods Sold 2,823,000 Inventory 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 56,700 523 Store Supplies Expense Store Equipment 210 Accounts Payable 96,600 529 Miscellaneous Selling 12,600 Expense 211 Salaries Payable 530 Office Salaries Expense 382,100 212 Customers Refunds 50,000 531 Rent Expense 83,700 Payable 310 Common Stock 100,000 532 Insurance Expense 311 Retained Earnings 585,300 539 Miscellaneous 7,800 Administrative Expense During May, the last month of the fiscal year, the following transactions were completed: May 1. Paid rent for May, $5,000. 3. Purchased merchandise on account from Martin C0,, terms 2/10, n/30, FOB shipping point, $36,000. 4. Paid freight on purchase of May 3, $600. 6. Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the goods sold was $41,000. 7. Received $22,300 cash from Halstad Co. on account. 10. Sold merchandise for cash, $54,000. The cost of the goods sold was $32,000. 13. Paid for merchandise purchased on May 3. 15. Paid advertising expense for last half of May, $11,000. 16. Received cash from sale of May 6. 19. Purchased merchandise for cash, $18,700. 19. Paid $33,450 to Buttons Co. on account. 20. Paid Korman Co. a cash refund 0f$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. Record the following transactions on Page 21 of the journal: May 20. 21. 21. 21. 24. 26. 28. 29. 30. 30. 31. Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,000. The cost of the goods sold was $70,000. For the convenience of Crescent Co., paid freight on sale of May 20, $2,300. Received $42,900 cash from Gee Co. on account. Purchased merchandise on account from Osterman C0,, terms 1/10, n/30, FOB destination, $88,000. Returned of damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000. Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800. Paid sales salaries of $56,000 and office salaries of $29,000. Purchased store supplies for cash, $2,400. Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, $78,750. The cost of the goods sold was $47,000. Received cash from sale of May 20 plus freight paid on May 21. Paid for purchase of May 21, less return of May 24.