Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows:

110	Cash	$ 83,600
112	Accounts Receivable	233,900
115	Merchandise Inventory	624,400
116	Estimated Returns Inventory	28,000
117	Prepaid Insurance	16,800
118	Store Supplies	11,400
123	Store Equipment	569,500
124	Accumulated Depreciation-Store Equipment	56,700
210	Accounts Payable	96,600
211	Salaries Payable
212	Customers Refunds Payable	50,000
310	Common Stock	100,000
311	Retained Earnings	585,300
312	Dividends	135,000
313	Income Summary
410	Sales	5,069,000
510	Cost of Merchandise Sold	2,823,000
520	Sales Salaries Expense	664,800
521	Advertising Expense	281,000
522	Depreciation Expense
523	Store Supplies Expense
529	Miscellaneous Selling Expense	12,600
530	Office Salaries Expense	382,100
531	Rent Expense	83,700
532	Insurance Expense
539	Miscellaneous Administrative Expense	7,800

1.

Prepare an unadjusted trial balance.

2.

At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).

Merchandise inventory on May 31, $570,000

Insurance expired during the year, $12,000

Store supplies on hand on May 31, $4,000

Depreciation for the current year, $14,000

Accrued salaries on May 31:

Sales salaries, $7,000

Office salaries, $6,600

Total accrued salaries: $13,600

The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of merchandise sold.

.

3.

A.	Journalize the adjusting entries. Record the adjusting entries on Page 22 of the journal.*
B.	Post the adjusting entries.

4.

Prepare an adjusted trial balance.

5.

Prepare

A.	An income statement.**
B.	A retained earnings statement.**
C.	A balance sheet.**

6.

A.	Prepare the closing entries. Record the closing entries on Page 23 of the journal.
B.	Post the closing entries. Indicate closed accounts by inserting 0 (zero) in either of the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account.

7.

Prepare a post-closing trial balance.

	* Refer to the Chart of Accounts for exact wording of account titles.
	** For guidance in completing the financial statements, be sure to read the instructions above each statement carefully.