Concept explainers
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:
During May, the last month of the fiscal year, the following transactions were completed:
Instructions
- 1. 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 (¸) in the Posting Reference column. Journalize the transactions for July, starting on Page 20 of the journal.
- 2. Post the journal to the general ledger, 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.
- 3. Prepare an unadjusted
trial balance . - 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).
- 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet.
- 6. Journalize and post the
adjusting entries . Record the adjusting entries on Page 22 of the journal. - 7. Prepare an adjusted trial balance.
- 8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
- 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. 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.
- 10. Prepare a post-closing trial balance.
(1), (2), (6), and (9)
Post the balance of each of the accounts.
Explanation of Solution
Enter the balances of each of the accounts.
Cash Account:
Cash Account | Account No. 110 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 83,600 | |||
1 | 20 | 5,000 | |||||
4 | 20 | 600 | |||||
7 | 20 | 22,300 | |||||
10 | 20 | 54,000 | |||||
13 | 20 | 35,280 | |||||
15 | 20 | 11,000 | |||||
16 | 20 | 67,130 | |||||
19 | 20 | 18,700 | |||||
19 | 20 | 33,450 | |||||
20 | 20 | 13,230 | |||||
21 | 21 | 2,300 | |||||
21 | 21 | 42,900 | |||||
26 | 21 | 7,500 | |||||
28 | 21 | 85,000 | |||||
29 | 21 | 2,400 | |||||
30 | 21 | 111,200 | |||||
31 | 21 | 82,170 | 84,500 |
Table (1)
Accounts Receivable Account:
Accounts Receivable | Account No. 112 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 233,900 | |||
6 | 20 | 67,130 | |||||
7 | 20 | 22,300 | |||||
16 | 20 | 67,130 | |||||
20 | 21 | 108,900 | |||||
21 | 21 | 2,300 | |||||
21 | 21 | 42,900 | |||||
30 | 21 | 77,175 | |||||
30 | 21 | 111,200 | 245,875 |
Table (2)
Inventory Account:
Inventory | Account No. 115 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 624,400 | |||
3 | 20 | 35,280 | |||||
4 | 20 | 600 | |||||
6 | 20 | 41,000 | |||||
10 | 20 | 32,000 | |||||
19 | 20 | 18,700 | |||||
20 | 20 | 8,000 | |||||
20 | 21 | 70,000 | |||||
21 | 21 | 87,120 | |||||
24 | 21 | 4,950 | |||||
26 | 21 | 4,800 | |||||
30 | 21 | 47,000 | 583,950 | ||||
31 | Adjusting | 22 | 13,950 | 570,000 |
Table (3)
Estimated Returns Inventory Account:
Estimated Returns Inventory | Account No. 116 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 28,000 | |||
20 | 20 | 8,000 | |||||
26 | 21 | 4,800 | 15,200 | ||||
31 | Adjusting | 22 | 35,000 | 50,200 |
Table (4)
Prepaid Insurance Account:
Prepaid Insurance | Account No. 117 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 16,800 | |||
31 | Adjusting | 22 | 12,000 | 4,800 |
Table (5)
Store Supplies Account:
Store Supplies | Account No. 118 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 11,400 | |||
29 | 21 | 2,400 | 13,800 | ||||
31 | Adjusting | 22 | 9,800 | 4,000 |
Table (6)
Store Equipment Account:
Store Equipment | Account No. 123 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 569,500 |
Table (7)
Accumulated Depreciation – Store Equipment Account:
Accumulated Depreciation – Store Equipment | Account No. 124 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 56,700 | |||
31 | Adjusting | 22 | 14,000 | 70,700 |
Table (8)
Accounts Payable Account:
Accounts Payable | Account No. 210 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 96,600 | |||
3 | 20 | 35,280 | |||||
13 | 20 | 35,280 | |||||
19 | 20 | 33,450 | |||||
21 | 21 | 87,120 | |||||
24 | 21 | 4,950 | |||||
31 | 21 | 82,170 | 63,150 |
Table (9)
Salaries Payable Account:
Salaries Payable | Account No. 211 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 31 | Adjusting | 22 | 13,600 | 13,600 |
Table (10)
Customers Refunds Payable Account:
Customers Refunds Payable | Account No. 212 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 50,000 | |||
20 | 20 | 13,230 | |||||
26 | 21 | 7,500 | 29,270 | ||||
31 | Adjusting | 22 | 60,000 | 89,270 |
Table (11)
L’s Capital Account:
L’s Capital | Account No. 310 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2015 | |||||||
June | 1 | Balance | ✓ | 685,300 | |||
2016 | |||||||
May | 31 | Closing | 23 | 741,855 | |||
31 | Closing | 23 | 135,000 | 1,292,155 |
Table (12)
L’s Drawing Account:
Retained Earnings | Account No. 311 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 135,000 | |||
31 | Closing | 23 | 135,000 |
Table (13)
Income Summary Account:
Income Summary | Account No. 313 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 31 | Closing | 23 | 5,316,205 | |||
31 | Closing | 23 | 4,574,350 | 741,855 | |||
31 | Closing | 23 | 741,855 |
Table (14)
Sales Account:
Sales | Account No. 410 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 5,069,000 | |||
6 | 20 | 67,130 | |||||
10 | 20 | 54,000 | |||||
20 | 21 | 108,900 | |||||
30 | 21 | 77,175 | 5,376,205 | ||||
31 | Adjusting | 22 | 60,000 | 5,316,205 | |||
31 | Closing | 23 | 5,316,205 |
Table (15)
Cost of Goods Sold Account:
Cost of Goods Sold | Account No. 510 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 2,823,000 | |||
6 | 20 | 41,000 | |||||
10 | 20 | 32,000 | |||||
20 | 21 | 70,000 | |||||
30 | 21 | 47,000 | 3,013,000 | ||||
31 | Adjusting | 22 | 13,950 | ||||
31 | Adjusting | 22 | 35,000 | 2,991,950 | |||
31 | Closing | 23 | 2,991,950 |
Table (16)
Sales Salaries Expense Account:
Sales Salaries Expense | Account No. 520 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 664,800 | |||
28 | 21 | 56,000 | 720,800 | ||||
31 | Adjusting | 22 | 7,000 | 727,800 | |||
31 | Closing | 23 | 727,800 |
Table (17)
Advertising Expense Account:
Advertising Expense | Account No. 521 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 281,000 | |||
15 | 20 | 11,000 | 292,000 | ||||
31 | Closing | 23 | 292,000 |
Table (18)
Depreciation Expense Account:
Depreciation Expense | Account No. 522 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 31 | Adjusting | 22 | 14,000 | 14,000 | ||
31 | Closing | 23 | 14,000 |
Table (19)
Stores Supplies Expense Account:
Stores Supplies Expense | Account No. 523 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 31 | Adjusting | 22 | 9,800 | 9,800 | ||
31 | Closing | 23 | 9,800 |
Table (20)
Miscellaneous Selling Expense Account:
Miscellaneous Selling Expense | Account No. 529 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 12,600 | |||
31 | Closing | 23 | 12,600 |
Table (21)
Office Salaries Expense Account:
Office Salaries Expense | Account No. 530 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 382,100 | |||
28 | 21 | 29,000 | 411,100 | ||||
31 | Adjusting | 22 | 6,600 | 417,700 | |||
31 | Closing | 23 | 417,700 |
Table (22)
Rent Expense Account:
Rent Expense | Account No. 531 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 83,700 | |||
1 | 20 | 5,000 | 88,700 | ||||
31 | Closing | 23 | 88,700 |
Table (23)
Insurance Expense Account:
Insurance Expense | Account No. 532 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 31 | Adjusting | 22 | 12,000 | 12,000 | ||
31 | Closing | 23 | 12,000 |
Table (24)
Miscellaneous Administrative Expense Account:
Miscellaneous Administrative Expense | Account No. 539 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2016 | |||||||
May | 1 | Balance | ✓ | 7,800 | |||
31 | Closing | 23 | 7,800 |
Table (25)
(1) and (2)
Record the journal entries.
Explanation of Solution
Record the journal entries.
Date | Particulars | Post. Ref. | Page 20 | ||
Debit ($) | Credit ($) | ||||
2016 | |||||
May | 1 | Rent Expense | 531 | 5,000 | |
Cash | 110 | 5,000 | |||
3 | Inventory | 115 | 35,280 | ||
Accounts Payable | 210 | 35,280 | |||
4 | Inventory | 115 | 600 | ||
Cash | 110 | 600 | |||
6 | Accounts Receivable | 112 | 67,130 | ||
Sales | 410 | 67,130 | |||
6 | Cost of Goods Sold | 510 | 41,000 | ||
Inventory | 115 | 41,000 | |||
7 | Cash | 110 | 22,300 | ||
Accounts Receivable | 112 | 22,300 | |||
10 | Cash | 110 | 54,000 | ||
Sales | 410 | 54,000 | |||
10 | Cost of Goods Sold | 510 | 32,000 | ||
Inventory | 115 | 32,000 | |||
13 | Accounts Payable | 210 | 35,280 | ||
Cash | 110 | 35,280 | |||
15 | Advertising Expense | 521 | 11,000 | ||
Cash | 110 | 11,000 | |||
16 | Cash | 110 | 67,130 | ||
Accounts Receivable | 112 | 67,130 | |||
19 | Inventory | 115 | 18,700 | ||
Cash | 110 | 18,700 | |||
19 | Accounts Payable | 210 | 33,450 | ||
Cash | 110 | 33,450 | |||
20 | Customers Refunds Payable | 212 | 13,230 | ||
Cash | 110 | 13,230 | |||
20 | Inventory | 115 | 8,000 | ||
Estimated Returns Inventory | 116 | 8,000 | |||
Date | Particulars | Post. Ref. | Page 21 | ||
Debit ($) | Credit ($) | ||||
20 | Accounts Receivable | 112 | 108,900 | ||
Sales | 410 | 108,900 | |||
20 | Cost of Goods Sold | 510 | 70,000 | ||
Inventory | 115 | 70,000 | |||
21 | Accounts Receivable | 112 | 2,300 | ||
Cash | 110 | 2,300 | |||
21 | Cash | 110 | 42,900 | ||
Accounts Receivable | 112 | 42,900 | |||
21 | Inventory | 115 | 87,120 | ||
Accounts Payable | 210 | 87,120 | |||
24 | Accounts Payable | 210 | 4,950 | ||
Inventory | 115 | 4,950 | |||
26 | Customers Refunds Payable | 212 | 7,500 | ||
Cash | 110 | 7,500 | |||
26 | Inventory | 115 | 4,800 | ||
Estimated Returns Inventory | 116 | 4,800 | |||
28 | Sales Salaries Expense | 520 | 56,000 | ||
Office Salaries Expense | 530 | 29,000 | |||
Cash | 110 | 85,000 | |||
29 | Store Supplies | 118 | 2,400 | ||
Cash | 110 | 2,400 | |||
30 | Accounts Receivable | 112 | 77,175 | ||
Sales | 410 | 77,175 | |||
30 | Cost of Goods Sold | 510 | 47,000 | ||
Inventory | 115 | 47,000 | |||
30 | Cash | 110 | 111,200 | ||
Accounts Receivable | 112 | 111,200 | |||
31 | Accounts Payable | 210 | 82,170 | ||
Cash | 110 | 82,170 |
Table (26)
3.
Prepare the unadjusted trial balance of Company P.
Explanation of Solution
Prepare an unadjusted trial balance.
P Company Unadjusted Trial Balance As on May 31, 2016 | |||
Accounts |
Account No. |
Debit Balances ($) |
Credit Balances ($) |
Cash | 110 | 84,500 | |
Accounts Receivable | 112 | 245,875 | |
Inventory | 115 | 583,950 | |
Estimated Returns Inventory | 116 | 15,200 | |
Prepaid Insurance | 117 | 16,800 | |
Store Supplies | 118 | 13,800 | |
Store Equipment | 123 | 569,500 | |
Accumulated Depreciation—Store Equipment | 124 | 56,700 | |
Accounts Payable | 210 | 63,150 | |
Salaries Payable | 211 | — | |
Customers Refunds Payable | 212 | 29,270 | |
Common Stock | 310 | 100,000 | |
Retained Earnings | 311 | 585,300 | |
Dividends | 312 | 135,000 | |
Sales | 410 | 5,376,205 | |
Cost of Goods Sold | 510 | 3,013,000 | |
Sales Salaries Expense | 520 | 720,800 | |
Advertising Expense | 521 | 292,000 | |
Depreciation Expense | 522 | — | |
Store Supplies Expense | 523 | — | |
Miscellaneous Selling Expense | 529 | 12,600 | |
Office Salaries Expense | 530 | 411,100 | |
Rent Expense | 531 | 88,700 | |
Insurance Expense | 532 | — | |
Miscellaneous Administrative Expense | 539 | 7,800 | |
Total | 6,210,625 | 6,210,625 |
Table (27)
(4) and (6)
Record the adjusting entry.
Explanation of Solution
Record the adjusting entry.
Date | Particulars |
Post. Ref. | Page 22 | ||
Debit ($) | Credit ($) | ||||
2016 | Adjusting Entries | ||||
May | 31 | Cost of Goods Sold | 510 | 13,950 | |
Inventory | 115 | 13,950 | |||
31 | Insurance Expense | 532 | 12,000 | ||
Prepaid Insurance | 117 | 12,000 | |||
31 | Store Supplies Expense | 523 | 9,800 | ||
Store Supplies | 118 | 9,800 | |||
31 | Depreciation Expense | 522 | 14,000 | ||
Accumulated. Depreciation —Store Equipment | 124 | 14,000 | |||
31 | Sales Salaries Expense | 520 | 7,000 | ||
Office Salaries Expense | 530 | 6,600 | |||
Salaries Payable | 211 | 13,600 | |||
31 | Sales | 410 | 60,000 | ||
Customer Refunds Payable | 212 | 60,000 | |||
31 | Estimated Returns Inventory | 116 | 35,000 | ||
Cost of Goods Sold | 510 | 35,000 |
Table (28)
(7)
Prepare the adjusted trial balance of Company P.
Explanation of Solution
Prepare the adjusted trial balance.
P Company Adjusted Trial Balance As on May 31, 2016 | |||
Particulars |
Account No. |
Debit Balances ($) |
Credit Balances ($) |
Cash | 110 | 84,500 | |
Accounts Receivable | 112 | 245,875 | |
Inventory | 115 | 570,000 | |
Estimated Returns Inventory | 116 | 50,200 | |
Prepaid Insurance | 117 | 4,800 | |
Store Supplies | 118 | 4,000 | |
Store Equipment | 123 | 569,500 | |
Accumulated Depreciation—Store Equipment | 124 | 70,700 | |
Accounts Payable | 210 | 63,150 | |
Salaries Payable | 211 | 13,600 | |
Customers Refunds Payable | 212 | 89,270 | |
Common Stock | 310 | 100,000 | |
Retained Earnings | 311 | 585,300 | |
Dividends | 312 | 135,000 | |
Sales | 410 | 5,316,205 | |
Cost of Goods Sold | 510 | 2,991,950 | |
Sales Salaries Expense | 520 | 727,800 | |
Advertising Expense | 521 | 292,000 | |
Depreciation Expense | 522 | 14,000 | |
Store Supplies Expense | 523 | 9,800 | |
Miscellaneous Selling Expense | 529 | 12,600 | |
Office Salaries Expense | 530 | 417,700 | |
Rent Expense | 531 | 88,700 | |
Insurance Expense | 532 | 12,000 | |
Miscellaneous Administrative Expense | 539 | 7,800 | |
Total | 6,238,225 | 6,238,225 |
Table (29)
(8)
Prepare the income statement, retained earnings, and balance sheet of P Company.
Explanation of Solution
Prepare the income statement.
P Company Income Statement For the Year Ended May 31, 2016 | |||
Particulars | Amount ($) | Amount ($) | Amount ($) |
Sales | 5,316,205 | ||
Cost of goods sold | (2,991,950) | ||
Gross profit | 2,324,255 | ||
Expenses: | |||
Selling expenses: | |||
Sales salaries expense | 727,800 | ||
Advertising expense | 292,000 | ||
Depreciation expense | 14,000 | ||
Store supplies expense | 9,800 | ||
Miscellaneous selling expense | 12,600 | ||
Total selling expenses | 1,056,200 | ||
Administrative expenses: | |||
Office salaries expense | 417,700 | ||
Rent expense | 88,700 | ||
Insurance expense | 12,000 | ||
Miscellaneous administrative expense | 7,800 | ||
Total administrative expenses | 526,200 | ||
Total expenses | (1,582,400) | ||
Net income | 741,855 |
Table (30)
Prepare the statement of owner’s equity.
P Company Statement of Owner’s Equity For the Year Ended May 31, 2016 | ||
L’s Capital, June 1, 2015 | 685,300 | |
Net income | 741,855 | |
Less: Withdrawals | (135,000) | |
Increase in owner’s equity | 606,855 | |
L’s Capital, May 31, 2016 | 1,292,155 |
Table (31)
Prepare the balance sheet of P Company.
P Company Balance Sheet As on May 31, 2016 | ||
Assets | Amount ($) | Amount ($) |
Current assets: | ||
Cash | $ 84,500 | |
Accounts receivable | 245,875 | |
Inventory | 570,000 | |
Estimated returns inventory | 50,200 | |
Prepaid insurance | 4,800 | |
Store supplies | 4,000 | |
Total current assets | $ 959,375 | |
Property, plant, and equipment: | ||
Store equipment | $ 569,500 | |
Accumulated depreciation—store equipment | (70,700) | |
Total property, plant, and equipment | 498,800 | |
Total assets | $1,458,175 | |
Liabilities | ||
Current liabilities: | ||
Accounts payable | $ 63,150 | |
Salaries payable | 13,600 | |
Customers refunds payable | 89,270 | |
Total liabilities | $ 166,020 | |
Owner’s Equity | ||
L’s Capital | 1,292,155 | |
Total owner’s equity | 1,292,155 | |
Total liabilities and owner’s equity | $1,458,175 |
Table (32)
(9)
Post the closing entries.
Explanation of Solution
Prepare the closing entries.
Date | Particulars |
Post. Ref. | Page 23 | ||
Debit ($) | Credit ($) | ||||
2016 | Closing Entries | ||||
May | 31 | Sales | 410 | 5,316,205 | |
Income Summary | 313 | 5,316,205 | |||
31 | Income Summary | 313 | 4,574,350 | ||
Cost of Goods Sold | 510 | 2,991,950 | |||
Sales Salaries Expense | 520 | 727,800 | |||
Advertising Expense | 521 | 292,000 | |||
Depreciation Expense | 522 | 14,000 | |||
Store Supplies Expense | 523 | 9,800 | |||
Miscellaneous Selling Expense | 529 | 12,600 | |||
Office Salaries Expense | 530 | 417,700 | |||
Rent Expense | 531 | 88,700 | |||
Insurance Expense | 532 | 12,000 | |||
Miscellaneous Administrative Expenses | 539 | 7,800 | |||
31 | Income Summary | 313 | 741,855 | ||
Retained Earnings | 311 | 741,855 | |||
31 | Retained Earnings | 311 | 135,000 | ||
Dividends | 312 | 135,000 |
Table (33)
(10)
Prepare the post-closing trial balance.
Explanation of Solution
Prepare the post-closing trial balance.
P Company Post-Closing Trial Balance May 31, 2016 | |||
Accounts |
Account No. |
Debit Balances ($) |
Credit Balances ($) |
Cash | 110 | 84,500 | |
Accounts Receivable | 112 | 245,875 | |
Inventory | 115 | 570,000 | |
Estimated Returns Inventory | 116 | 50,200 | |
Prepaid Insurance | 117 | 4,800 | |
Store Supplies | 118 | 4,000 | |
Store Equipment | 123 | 569,500 | |
Accumulated Depreciation—Store Equipment | 124 | 70,700 | |
Accounts Payable | 210 | 63,150 | |
Salaries Payable | 211 | 13,600 | |
Customers Refunds Payable | 212 | 89,270 | |
L’s Capital | 310 | 1,292,155 | |
Total | 1,528,875 | 1,528,875 |
Table (34)
(5)
Prepare the worksheet for Company P.
Explanation of Solution
Prepare the worksheet.
Figure (1)
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Chapter 6 Solutions
Financial Accounting
- 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: During May, the last month of the fiscal year, the following transactions were completed: Record the following transactions on Page 21 of the journal: Instructions 1. 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 () in the Posting Reference column. Journalize the transactions for May, starting on Page 20 of the journal. 2. Post the journal to the general ledger, 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. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of stockholders equity, and a balance sheet. Assume that additional common stock of 10,000 was issued in January 20Y6. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account. 10. Prepare a post-closing trial balance.arrow_forwardPalisade 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: During May, the last month of the fiscal year, the following transactions were completed: Instructions 1. 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 () in the Posting Reference column. Journalize the transactions for May, starting on Page 20 of the journal. 2. Post the journal to the general ledger, 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. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.arrow_forwardMacDonald Bookshop had the following transactions that occurred during February of this year: Required 1. Journalize the transactions for February in the cash payments journal. Assume the periodic inventory method is used. 2. If you are using Working Papers, total and rule the journal. Prove the equality of the debit and credit totals.arrow_forward
- Kelley Company has completed the following October sales and purchases journals: a. Total and post the journals to T accounts for the general ledger and the accounts receivable and accounts payable ledgers. b. Complete a schedule of accounts receivable for October 31, 20--. c. Complete a schedule of accounts payable for October 31, 20--. d. Compare the balances of the schedules with their respective general ledger accounts. If they are not the same, find and correct the error(s).arrow_forwardPalisade 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: During May, the last month of the fiscal year, the following transactions were completed: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…arrow_forwardCarla Vista Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, Carla Vistas’ ledger showed Cash of $9,000 and Common Stock of $9,000. Journalize the transactions using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Post the transactions to T-accounts. Be sure to enter the beginning cash and common stock balances. (Post entries in the order of journal entries posted in part (a). Round answers to 0 decimal places, e.g. 5,275.) Prepare an income statement through gross profit for the month of May 2022. (Round answers to 0 decimal places, e.g. 5,275.) Calculate the profit margin and the gross profit rate. (Assume operating expenses were $1,440.) (Round answers to 1 decimal place, e.g.…arrow_forward
- The following purchase transactions occurred during the last few days of Whilczel Company's business year, which ends October 31, or in the first few days after that date. A periodic inventory system is used. · An invoice for P6,000, terms FOB shipping point, was received and entered November 1. The invoice shows that the material was shipped October 29, but the receiving report indicates receipt of goods on November 3. · An invoice for P2,700, terms FOB destination, was received and entered November 2. The receiving report indicates that the goods were received October 29. · An invoice for P3,150, terms, FOB shipping point, was received October 15, but never entered. Attached to it is a receiving report indicating that the goods were received October 18. Across the face of the receiving report is the following notation: "Merchandise not of the same quality as ordered - returned for credit October 19". · An invoice for P3,600 terms FOB shipping…arrow_forwardThe following purchase transactions occurred during the last few days of Whilczel Company's business year, which ends October 31, or in the first few days after that date. A periodic inventory system is used. · An invoice for P6,000, terms FOB shipping point, was received and entered November 1. The invoice shows that the material was shipped October 29, but the receiving report indicates receipt of goods on November 3. · An invoice for P2,700, terms FOB destination, was received and entered November 2. The receiving report indicates that the goods were received October 29. · An invoice for P3,150, terms, FOB shipping point, was received October 15, but never entered. Attached to it is a receiving report indicating that the goods were received October 18. Across the face of the receiving report is the following notation: "Merchandise not of the same quality as ordered - returned for credit October 19". · An invoice for P3,600 terms FOB shipping…arrow_forwardThe following purchase transactions occurred during the last few days of Whilczel Company's business year, which ends October 31, or in the first few days after that date. A periodic inventory system is used. · An invoice for P6,000, terms FOB shipping point, was received and entered November 1. The invoice shows that the material was shipped October 29, but the receiving report indicates receipt of goods on November 3. · An invoice for P2,700, terms FOB destination, was received and entered November 2. The receiving report indicates that the goods were received October 29. · An invoice for P3,150, terms, FOB shipping point, was received October 15, but never entered. Attached to it is a receiving report indicating that the goods were received October 18. Across the face of the receiving report is the following notation: "Merchandise not of the same quality as ordered - returned for credit October 19". · An invoice for P3,600 terms FOB shipping…arrow_forward
- Shankar Company uses a periodic system to record inventory transactions. The company purchases inventory on account on February 2 for $37,000, with terms 3/10, n/30. On February 10, the company pays on account for the inventory. Record the inventory purchase on February 2 and the payment on February 10. Note: If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. View transaction list Journal entry worksheet P 2 Record the purchase of inventory on account. Note: Enter debits before credits. Date February 02 Record entry General Journal Clear entry Debit Credit View general journalarrow_forwardRiverbed Company had the following account balances at year-end: Cost of Goods Sold $62,380, Inventory $14,410, Utilities Expense $32,500, Sales Revenue $126,790, Sales Discounts $1,170, and Sales Returns and Allowances $1,700. A physical count of inventory determines that merchandise inventory on hand is $12,360. They use the perpetual inventory system. (a) Prepare the adjusting entry necessary as a result of the physical count. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount (b) Prepare closing entries. (List all debit entries before credit entries. Credit account titles are automatically…arrow_forwardPrepare the journal entries to record the following transactions on Skysong, Inc.'s books using a perpetual inventory system. On March 2, Riverbed Company sold $932,000 of merchandise on account to Skysong, Inc., terms 3/10, n/30. The cost of the merchandise sold was $592,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation I eTextbook and Media List of Accounts norcal_archives_20....zip On March 6, Skysong, Inc. returned $93,200 of the merchandise purchased on March 2. The cost of the returned merchandise was $59,200. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) A Debit QCA 5.docx Credit response essay.docx Narrow_forward
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