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

$83,600

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 DepreciationStore Equipment

56,700

529

Miscellaneous Selling Expense

12,600

210

Accounts Payable

96,600

530

Office Salaries Expense

382,100

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

1. Prepare a multiple-step income statement.

Palisade Creek Co. Income Statement For the Year Ended May 31, 20Y6
CashCost of goods soldSalesSales salaries expenseRetained earningsSales			$ fill in the blank 2
Cost of goods soldInsurance expenseInventoryStore equipmentCost of goods sold			fill in the blank 4
Advertising expenseGross profitIncome from operationsRetained earningsGross profit			fill in the blank 6
Operating Expenses:
Selling expenses:
Accounts payableSalaries payableSales salaries expenseStore suppliesSales salaries expense	$ fill in the blank 8
Accounts receivableAdvertising expenseCashSalesAdvertising expense	fill in the blank 10
Accounts payableAccumulated depreciation-store equipmentCost of goods soldDepreciation expenseDepreciation expense	fill in the blank 12
CashCommon stockStore suppliesStore supplies expenseStore supplies expense	fill in the blank 14
CashInventoryMiscellaneous selling expenseSales returns and allowancesMiscellaneous selling expense	fill in the blank 16
Total selling expenses		$ fill in the blank 17
Administrative expenses:
Retained earningsOffice salaries expenseSalaries payableSalesOffice salaries expense	$ fill in the blank 19
Accounts payableAccounts receivableCost of goods soldRent expenseRent expense	fill in the blank 21
CashInsurance expenseInventoryPrepaid insuranceInsurance expense	fill in the blank 23
Advertising expenseMiscellaneous administrative expenseSalesStore supplies expenseMiscellaneous administrative expense	fill in the blank 25
Total administrative expenses		fill in the blank 26
Total operating expenses			fill in the blank 27
Net income			$ fill in the blank 28

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, 20Y6
	Common Stock	Retained Earnings	Total
Balances, June 1, 20Y5Balances, May 31, 20Y6DividendsIssued common stockNet incomeNet lossBalances, June 1, 20Y5	$fill in the blank 30	$fill in the blank 31	$fill in the blank 32
Balances, June 1, 20Y5Balances, May 31, 20Y6DividendsIssued common stockNet incomeNet lossIssued common stock	fill in the blank 34		fill in the blank 35
Balances, June 1, 20Y5Balances, May 31, 20Y6DividendsIssued common stockNet incomeNet lossNet income		fill in the blank 37	fill in the blank 38
Balances, June 1, 20Y5Balances, May 31, 20Y6DividendsIssued common stockNet incomeNet lossDividends		fill in the blank 40	fill in the blank 41
Balances, June 1, 20Y5Balances, May 31, 20Y6DividendsIssued common stockNet incomeNet lossBalances, May 31, 20Y6	$fill in the blank 43	$fill in the blank 44	$fill in the blank 45

3. Prepare a balance sheet.

Palisade Creek Co. Balance Sheet May 31, 20Y6
Assets
Current assets:
Accounts payableCashSalesStore equipmentCash	$fill in the blank 47
Accounts payableAccounts receivableAdvertising expenseSalaries payableAccounts receivable	fill in the blank 49
Cost of goods soldCommon stockInventorySales returns and allowancesInventory	fill in the blank 51
Estimated returns inventoryInsurance ExpenseRetained earningsSales discountsEstimated returns inventory	fill in the blank 53
Cost of goods soldPrepaid insuranceSalaries payableStore supplies expensePrepaid insurance	fill in the blank 55
Cost of goods soldSalaries payableStore suppliesStore supplies expenseStore supplies	fill in the blank 57
Total current assets		$fill in the blank 58
Property, plant, and equipment:
InventoryMiscellaneous administrative expenseSales discountsStore equipmentStore equipment	$fill in the blank 60
Accumulated depreciationstore equipment Depreciation expensestore equipmentInventorySales discountsAccumulated depreciationstore equipment	fill in the blank 62
Total property, plant, and equipment		fill in the blank 63
Total assets		$fill in the blank 64
Liabilities
Current liabilities:
Accounts payableAccounts receivableSales discountsSales returns and allowancesAccounts payable	$fill in the blank 66
Cost of goods soldOffice salaries expenseSalaries payableSales salaries expenseSalaries payable	fill in the blank 68
Accounts receivableCustomers refunds payableOffice salaries expenseSales salaries expenseCustomers refunds payable	fill in the blank 70
Total liabilities		$fill in the blank 71
Stockholders Equity
CashCommon stockRetained earningsSalesCommon stock	$fill in the blank 73
CashCommon stockRetained earningsSalesRetained earnings	fill in the blank 75
Total stockholders equity		fill in the blank 76
Total liabilities and Stockholders Equity		$fill in the blank 77

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