Exercise 1 Co. is a merchandising business. The account balances for Palisade Creek Ca as of May 1, 2014 (unless otherwise indicated), are as follows Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Store Supplies 83,600 233,900 602,400 16,800 11,400 569,500 92.700 9,400 2,823,000 664,800 281,000 Accumulated Depreciation Store Equipment Accounts Salaries Payable Lynn Tolley, Capital, June 1, 2013 Lynn Tolley, Drawing Sales Returns and Allowances Sales Discounts Cost of Merchandise Sold Sales Salaries Expense Advertising Expense Depreciation Expense Store Supplies Expense Miscellaneous Selling Expense Office Salaries Expense Rent Expense Insurance Expense Miscellaneous Administrative Expense S6,700 96,600 12,600 382,100 83,700 685,300 135,000 5221.100 7,800 During May, the last month of the fiscal year, the following transactions were completed: 1. Paid rent for May, $5,000 3. Purchased merchandise on account 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 merchandise sold was $41,000 7. Received $22,300 cash from Halstad Co, on account, no discount 10. Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000. 13. Paid for merchandise purchased on May 3, less discount 14. Received merchandise returned on sale of May 6,$13,500. The cost of the merchandise returned was $8,000. 15. Paid advertising expense for last half of May, $11,000. 16. Received cash from sale of May 6, less return of May 14 and discount 19. Purchased merchandise for cash, $18,700. 19. Paid $33,450 to Buttons Co. on account, no discount. from Martin Co, terms 2/10, n/30, FOB shipping point, $36,000 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. 21. For the convenience of Crescent Co, paid freight on sale of May 20, $2,300. 21. Received $42,900 cash from Gee Co on account, no discount. 21. Purchased merchandise on account from Osterman Co, terms 1/10, n/30, FOB destination, $88,000. 24. Returned $5,000 of damaged merchandise purchased on May 21, receiving credit from the seller 26 Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800. 28. Paid sales salaries of $56,000 and office salaries of $29,000. 29. Purchased store supplies for cash, $2,400 30. Sold merchandise on account to Turner a terms 2/10, ? 30, POB shipping point, S78750. The cost of the merchandise sold was $47,000 30. Received cash from sale of May 20, less discount, plus freight paid on May 21. 31. Paid for purchase of May 21, less return of May 24 and discount. Instructions: 1. Journalize the transactions 2 Prepare an unadjusted trial balance. 3. At the end of May, the following adjustment data were assembl ed a Merchandise inventory on May 31 b. Insurance expired during the year c Store supplies on hand on May 31 d. Depreciation for the current year e. Accrued salaries on May 31 $S50,000 12,000 4,000 14,000 $7,000 6,600 Sales salaries Office salaries 4. Prepare an adjusted trial balance 13,600 5. Prepare an income statement, a statement of owner's equity, and a balance sheet