Palisade Creek Co. Income Statement For the Year Ended May 31, 2016 Sales 5,316,205 2,991,950 2,324,255 Cost of merchandise sold Gross profit Expenses: Selling expenses: Sales salaries expense 727,800 292,000 14,000 9,800 12,600 Advertising expense Depreciation expense Store supplies expense Miscellaneous selling expense Total selling expenses Administrative expenses: Office salaries expense Rent expense 1,056,200 417,700 88,700 Insurance expense 12,000 292,000 x Advertising expense Total administrative expenses 810,400 x Total expenses 1,866,600 X Net income 4,190,855 x 2. Prepare a statement of owner's equity. Palisade Creek Co. Statement of Owner's Equity 83,600 x For the Year Ended May 31, 2016 Lynn Tolley, capital, June 1, 2015 Increase in owner's equity 261,300 x Net loss for the year 344,900 x Less withdrawals X 135,000 X Lynn Tolley, capital, May 31, 2016 $ 218,600 X Palisade Creek Co. Balance Sheet May 31, 2016 Assets S 84,500 Current assets: Cash Accounts receivable Merchandise inventory Estimated returns inventory 245,875 570,000 50,200 Prepaid insurance 4,800 Store supplies 4,000 959,375 Total current assets Property, plant and equipment: Store equipment 569,500 Less accumulated depreciation 70,700 Total property, plant and equipment 498,800 Total assets 1,458,175 Liabilities Current liabilities: Accounts payable Salaries payable Customers refunds payable 63,150 13,600 Total liabilities Owner's equity Lynn Tolley, capital X Total liabilities and owner's equity Palisade Creek Co. Adjusted Trial Balance May 31, 2016 Debit Balances Credit Balances Cash 84,500 Accounts Receivable 245,875 Merchandise Inventory 570,000 Estimated Returns Inventory 50,200 Prepaid Insurance 4,800 Store Supplies 4,000 569,500 70,700 63,150 13,600 > 89,270 > Store Equipment Accumulated DepreciationStore Equipment Accounts Payable Salaries Payable Customers Refunds Payable Lynn Tolley, Capital Lynn Tolley, Drawing Sales Cost of Merchandise Sold Sales Salaries Expense Advertising Expense 685,300 135,000 5,316, 205 2,991,950 727,800 292,000 Depreciation Expense 14,000 9,800 Store Supplies Expense Miscellaneous Selling Expense 12,600 Office Salaries Expense 417,700 Rent Expense 88,700 Insurance Expense 12,000 Miscellaneous Administrative Expense 7,800 6,238,225 6,238,225
