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Part 1 and Part 2: 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, 2019 (unless otherwise indicated), are as follows: 110 Cash $83,600 112 Accounts Receivable 233,900 115 Merchandise Inventory 116 Estimated Returns Inventory 624,400 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 Customer Refunds Payable 50,000 212 Salaries Payable 310 Lynn Tolley, Capital, June 1, 2018 311 Lynn Tolley, Drawing 685,300 135,000 410 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 Part 1: Using the attached spreadsheet, enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (V) in the Posting Reference column. Journalize the transactions for May, the last month of the fiscal year, below. Part 2: Post the journal to the general ledger you created in Part 1, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. For a compound transaction, i an amaunt box does not require an entry, leave it blank or enter "o". May 1: Pald rent for May, $5,000. Description Post. Ref Debit Credit Rent Expense - 5,000 Cash 5,000 May 3: Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000 Post. Description Debit Credit Ref. Merchandise Inventory . V 35,280 Accounts Payable-Martin Co. 35,280 May 4: Paid freight on purchase of May 3, $600. Description Post. Ref. Debit Credit Merchandise Inventory 600 Cash 600 May 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. Post. Description Debit Credit Ref. Accounts Receivable-Korman Co. 67,130 Sales 67,130 Cost of Merchandise Sold 41,000 Merchandise Inventory 41,000 May 7: Received $22,300 cash from Halstad Co. on account. Post. Description Debit Credit Ref. Cash 22,300 Accounts Receivable-Halstad Co. 22,300 May 10: Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000. Post. Description Debit Credit Ref. Cash Sales Cost of Merchandise Sold 32,000 Merchandise Inventory 32,000 May 13: Paid for merchandise purchased on May 3. Post. Description Debit Credit Ref. Accounts Payable-Martin Co. 35,280 Cash 35,280 May 15: Paid advertising expense for last half of May, $11,000. Description Post. Ref. Debit Credit Advertising Expense 11,000 Cash 11,000 May 16: Received cash from sale of May 6. Post. Description Debit Credit Ref. Cash 67,130 Accounts Receivable-Korman Co. 67,130 May 19: Purchased merchandise for cash, $18,700. Description Post. Ref. Debit Credit Merchandise Inventory 18,700 Cash 18,700 May 19: Paid $33,450 to Buttons Co, on account. Post. Description Debit Credit Ref. Accounts Payable-Buttons Co. Cash May 20: Paid Korman Co. a cash refund of $13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was $13,500, and the cost of the returned merchandise was $8,000. Description Post. Ref. Debit Credit Customers Refunds Payable Cash Merchandise Inventory 8,000 Estimated Returns Inventory 8,000 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. Description Post. Ref. Debit Credit Accounts Receivable-Crescent Co. 108,900 Sales 108,900 Cost of Merchandise Sold 70,000 Merchandise Inventory 70,000 May 21: For the convenience of Crescent Co., paid freight on sale of May 20, $2,300. Post. Description Debit Credit Ref. Accounts Receivable-Crescent Co. 2,300 Cash 2,300 May 21: Received $42,900 cash from Gee Co. on account. Post. Description Debit Credit Ref. Cash 42,900 Accounts Receivable-Gee Co. 42,900 May 21: Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000. Post. Description Debit Credit Ref. Merchandise Inventory 87,120 Accounts Payable-Osterman Co. 87,120 May 24: Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000. Post. Description Debit Credit Ref. Accounts Payable-Osterman Co. 4,950 Merchandise Inventory 4,950 May 24: Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000. Post. Description Debit Credit Ref. Accounts Payable-Osterman Co. 4,950 Merchandise Inventory 4,950 May 26: Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800. Post. Description Debit Credit Ref. Customers Refunds Payable 7,500 Cash 7,500 Merchandise Inventory Estimated Returns Inventory May 28: Paid sales salaries of $56,000 and office salaries of $29,000. Description Post. Ref. Debit Credit Sales Salaries Expense 56,000 Office Salaries Expense Cash May 29: Purchased store supplies for cash, $2,400. Description Post. Ref. Debit Credit Store Supplies 2,400 Cash 2,400 May 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. Post. Description Debit Credit Ref. Accounts Receivable-Turner Co. 77,175 Sales 77,175 Cost of Merchandise Sold 47,000 Merchandise Inventory 47,000 May 30: Received cash from sale of May 20 plus freight paid on May 21. Post. Description Debit Credit Ref. Cash Accounts Receivable-Crescent Co. May 31: Paid for purchase of May 21, less return of May 24. Post. Description Debit Credit Ref. Accounts Payable-Osterman Co. 82,170 Cash 82,170 Part 3: NOTE: You must complete parts 1 and 2 before completing part 3. Prepare an unadjusted trial balance. If an amount box does not require an entry, leave it blank. Palisade Creek Co. Unadjusted Trial Balance May 31, 2019 Debit Balances Credit Balances Cash 84,500 Accounts Receivable Merchandise Inventory Estimated Returns Inventory Prepaid Insurance 16,800 Store Supplies 13,800 Store Equipment 569,500 Accumulated Depreciation Store Equipment 56,700 Accounts Payable 63,150 Customer Refunds Payable Salaries Payable Lynn Tolley, Capital 685,300 Lynn Tolley, Drawing 135,000 Sales Cost of Merchandise Sold Sales Salaries Expense 720,800 Advertising Expense 292,000 Depreciation Expense Store Supplies Expense Miscellaneous Selling Expense Office Salaries Expense 411,100 Rent Expense 88,700 Insurance Expense Miscellaneous Administrative Expense 7,800 Part 4 and 6: Note: You must complete parts 1, 2 and 3 before attempting to complete part 4 and part 6. Part 5 is an optional work sheet. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete Part 6. a. Merchandise inventory on May 31 $570,000 b. Insurance expired during the year 12,000 c. Store supplies on hand on May 31 4,000 d. Depreciation for the current year 14,000 e. Accrued salaries on May 31: Sales salaries $7,000 Office salaries 6,600 13,600 f. The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of merchandise sold. 6. Journalize the adjusting entries. For a compound transaction, if an amount box does not require an entry, leave it blank. Post the adjusting entries to the attached spreadsheet you used in parts 1 and 2. Page 22 Post. Date Description Debit Credit Ref. Adjusting Entries 2019 May 31 Cost of Merchandise Sold Merchandise Inventory May 31 Insurance Expense Prepaid Insurance May 31 Store Supplies Expense Store Supplies May 31 Depreciation Expense Accumulated Depreciation-Store Equipment May 31 Sales Salaries Expense Office Salaries Expense Salaries Payable May 31 Sales Customer Refunds Payable May 31 Estimated Returns Inventory Cost of Merchandise Sold Part 7: You must complete parts 1, 2, 3, 4 and 6 before completing part 7. Part 5 is the optional work sheet. Prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank. Palisade Creek Co. Adjusted Trial Balance May 31, 2019 Debit Balances Credit Balances Cash Accounts Receivable Merchandise Inventory Estimated Returns Inventory Prepaid Insurance Store Supplies Store Equipment Accumulated Depreciation-Store Equipment Accounts Payable Customer Refunds Payable Salaries Payable Lynn Tolley, Capital Lynn Tolley, Drawing Sales 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