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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 DepreciationStore 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

May 1: Paid rent for May, $5,000.

May 3: Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.

May 4: Paid freight on purchase of May 3, $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.

May 7: Received $22,300 cash from Halstad Co. on account.

May 10: Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.

May 13: Paid for merchandise purchased on May 3.

May 15: Paid advertising expense for last half of May, $11,000.

May 16: Received cash from sale of May 6.

May 19: Purchased merchandise for cash, $18,700.

May 19: Paid $33,450 to Buttons Co. on account.

May 20: Paid Korman Co. a cash refund of $5,000 for damaged merchandise from sale of May 6. Korman Co. kept the merchandise.

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.

May 21: For the convenience of Crescent Co., paid freight on sale of May 20, $2,300.

May 21: Received $42,900 cash from Gee Co. on account.

May 21: Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000.

May 24: Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.

May 26: Refunded cash on sales made for cash, $800. The defective merchandise was not returned by the customer.

May 28: Paid sales salaries of $56,000 and office salaries of $29,000.

May 29: Purchased store supplies for 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.

May 30: Received cash from sale of May 20 plus freight paid on May 21.

May 31: Paid for purchase of May 21, less return of May 24.

Part 3: NOTE: You must complete parts 1 and 2 before completing part 3. Comprehensive Problem 2 Part 4 and 6: Prepare an unadjusted trial balance. If an amount box does not require an entry, leave it bli 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 Palisade Creek Co. Unadjusted Trial Balance May 31, 2017 Merchandise inventory on May 31 $585,200 b. Insurance expired during the year 12,000 Debit Balances Credit Balances Store supplies on hand on May 31 4,000 Cash 99,430 d. Depreciation for the current year 14,000 Accounts Receivable 245,875 e. Accrued salaries on May 31: Sales salaries $7,000 Merchandise Inventory 599,150 Office salaries 6,600 13,600 Prepaid Insurance 16,800 f. The adjustment for customer refunds and allowances is $60,000. Store Supplies 13,800 6. Journalize the adjusting entries. If an amount box does not require an entry, leave it blank. Post the adjusting entries to the attached spreadsheet you used parts 1 and 2. Store Equipment 569,500 Page 22 Accumulated Depreciation-Store Equipment 56,700 Date Description Post Ref. Debit Credit Accounts Payable 63,150 Adjusting Entries Customer Refunds Payable 44,200 2017 Salaries Payable 0 0 May 31 Cost of Merchandise Sold 13,950 Lynn Tolley, Capital 685,300 Merchandise Inventory 13,950 Lynn Tolley, Drawing 135,000 Sales 5,376,205 May 31 Insurance Expense 12,000 12,000 Cost of Merchandise Sold 3,013,000 Prepaid Insurance Sales Salaries Expense 720,800 May 31 Store Supplies Expense 9,800 Advertising Expense 292,000 Store Supplies 9,800 Depreciation Expense 0 o Store Supplies Expense 0 0 May 31 Depreciation Expense 14,000 Miscellaneous Selling Expense 12,600 Accumulated Depreciation-Store Equipment 14,000 Office Salaries Expense 411,100 7,000 Rent Expense 88,700 May 31 Sales Salaries Expense Office Salaries Expense 6,600 Insurance Expense 0 0 Salaries Payable 13,600 Miscellaneous Administrative Expense 7,800 6,225,555 6,225,555 May 31 Sales 60,000 Customer Refunds Payable 60,000 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. 1. Prepare an income statement. Adjusted Trial Balance May 31, 2017 Palisade Creek Co. Income Statement For the Year Ended May 31, 2017 Debit Balances Credit Balances Sales 5,316, 205 Cash Cost of merchandise sold 2,991,950 84,500 X Gross profit 2,324,255 Accounts Receivable 245,875 Expenses Merchandise Inventory 570,000 X Selling expenses: Sales salaries expense 727,800 Prepaid Insurance 4,800 Advertising expense 292,000 Store Supplies 4,000 Depreciation expense 14,000 Store supplies expense 9,800 Store Equipment 569,500 Miscellaneous selling expense 12,600 Accumulated Depreciation-Store Equipment 70,700 Total selling expenses 1,056,200 Accounts Payable 63,150 Administrative expenses: Office salaries expense 417,700 Customer Refunds Payable 89,270 x Rent expense 88,700 Salaries Payable 13,600 Insurance expense 12,000 Miscellaneous administrative expense 7,800 Lynn Tolley, Capital 685,300 Total administrative expenses 526,200 Lynn Tolley, Drawing 135,000 Total expenses 1,582,400 Sales 5,316,205 Net income 741,855 Cost of Merchandise Sold 2,991,950 X Sales Salaries Expense 727,800 Advertising Expense 292,000 Depreciation Expense 14,000 Store Supplies Expense 9,800 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 x 6,238,225 Palisade Creek Co. Statement of Owner's Equity For the Year Ended May 31, 2017 ). 3. Prepare a balance sheet. Palisade Creek Co. Balance Sheet May 31, 2017 Assets Current assets: Total current assets Property, plant, and equipment: Total property, plant, and equipment Total assets Liabilities Current liabilities: Total liabilities Owner's equity Total liabilities and owner's equity Comprehensive Problem 2 Part 9: You must complete parts 1, 2, 3, 4, 6, 7 and 8 before attempting to complete part 9. Part 5 is optional. Journalize the closing entries. Then post the journal to the general ledger you created in part 1. Indicate closed accounts by inserting a line in both the balance columns opposite the closing entry. Insert the new balance in the owner's capital account. If an amount box does not require an entry, leave it blank. Page 23 Credit Date Post. Ref. Debit Description Closing Entries 2017 May 31 Comprehensive Problem 2 Part 10: You must complete parts 1, 2, 3, 4, 6, 7, 8 and 9 before attempting to complete part 10. Part 5 is optional. Prepare a post-closing trial balance. If an amount box does not require an entry, leave it blank. May 31 Palisade Creek Co. Post-Closing Trial Balance May 31, 2017 Debit Balances Credit Balances Cash 99,430 Accounts Receivable 245,875 Merchandise Inventory 599,150 X Prepaid Insurance 16,800 x Store Supplies 13,800 X Store Equipment 56,700 X Accumulated Depreciation-Store Equipment Accounts Payable 63,150 Customer Refunds Payable 44,200 x Salaries Payable Lynn Tolley, Capital 1,380,505 x