Cash $ 83,600 233,900 110 112 Accounts Receivable 115 Merchandise Inventory 624,400 116 Estimated Returns Inventory Prepaid Insurance 28,000 117 16,800 118 Store Supplies 11,400 123 Store Equipment Accumulated Depreciation-Store Equipment Accounts Payable Customer Refunds Payable Salaries Payable Lynn Tolley, Capital, June 1, 2018 Lynn Tolley, Drawing 569,500 124 56,700 210 96,600 211 50,000 212 310 685,300 311 135,000 410 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 83,700 Rent Expense Insurance Expense 532 539 Miscellaneous Administrative Expense 7,800

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:

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 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.
Record the following transactions on Page 21 of the journal:
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, $7,500. The cost of the merchandise returned was $4,800.
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.

nstructions
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).
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.
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 Balance columns opposite the closing entry. Insert the new balance in the owner’s capital account.
10. Prepare a post-closing trial balance.