Part 1 and Part 2:

Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 20Y7 (unless otherwise indicated), are as follows:

110	Cash	$83,600
112	Accounts Receivable	233,900
115	Merchandise Inventory	652,400
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	Customer Refunds Payable	50,000
212	Salaries Payable
310	Lynn Tolley, Capital, June 1, 20Y6	685,300
311	Lynn Tolley, Drawing	135,000
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

During May, the last month of the fiscal year, the following transactions were completed:

Record the following transactions on page 20 of the journal.

May	1	Paid rent for May, $5,000.
	3	Purchased merchandise on account from Martin Co., 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 merchandise 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 merchandise 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 of $5,000 for damaged merchandise from sale of May 6. Korman Co. kept the merchandise.

Record the following transactions on page 21 of the journal.

May	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.
	21	Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000.
	24	Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.
	26	Refunded cash on sales made for cash, $800. The defective merchandise was not returned by the customer.
	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 Co., terms 2/10, n/30, FOB shipping point, $78,750. The cost of the merchandise sold was $47,000.
	30	Received cash from sale of May 20 plus freight paid on May 21.
	31	Paid for purchase of May 21, less return of May 24.

4.

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, $585,200

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 refunds and allowances is $60,000.

5.

(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. Find a blank end-of-period work sheet in the Excel spreadsheet you previously downloaded.

6.

A.	Journalize the adjusting entries. Record the adjusting entries on Page 22 of the journal.*
B.	Post the adjusting entries. Add the appropriate posting reference to the journal.

7.

Prepare an adjusted trial balance. Accounts with zero balances can be left blank.

*Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Part 4:

7. Prepare an adjusted trial balance. Accounts with zero balances can be left blank.

Palisade Creek Co.

ADJUSTED TRIAL BALANCE

May 31, 20Y7

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash
2	Accounts Receivable
3	Merchandise Inventory
4	Prepaid Insurance
5	Store Supplies
6	Store Equipment
7	Accumulated Depreciation-Store Equipment
8	Accounts Payable
9	Customer Refunds Payable
10	Salaries Payable
11	Lynn Tolley, Capital
12	Lynn Tolley, Drawing
13	Sales
14	Cost of Merchandise Sold
15	Sales Salaries Expense
16	Advertising Expense
17	Depreciation Expense
18	Store Supplies Expense
19	Miscellaneous Selling Expense
20	Office Salaries Expense
21	Rent Expense
22	Insurance Expense
23	Miscellaneous Administrative Expense
24	Totals