Palisade Creek Co. Unadjusted Trial Balance May 31, 2019 Debit Credit 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
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Can you prepare an unadjusted
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 | 233,900 | |
| 115 | Merchandise Inventory | 624,400 |
| 116 | Estimated Returns Inventory | 28,000 |
| 117 | Prepaid Insurance | 16,800 |
| 118 | Store Supplies | 11,400 |
| 123 | Store Equipment | 569,500 |
| 124 | 56,700 | |
| 210 | Accounts Payable | 96,600 |
| 211 | Customer Refunds Payable | 50,000 |
| 212 | Salaries Payable | — |
| 310 | Lynn Tolley, Capital, June 1, 2018 | 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.
| Description | Debit | Credit | |
|---|---|---|---|
| Rent Expense | 5000 | ||
| Cash | 5000 |
May 3: Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.
| Description | Debit | Credit | |
|---|---|---|---|
| Merchandise Inventory | 35280 | ||
| Accounts Payable-Martin Co. | 35280 |
May 4: Paid freight on purchase of May 3, $600.
| Description | 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.
| Description | Debit | Credit | |
|---|---|---|---|
| Accounts Receivable-Korman Co. | 67130 | ||
| Sales | 67130 | ||
| Cost of Merchandise Sold | 41000 | ||
| Merchandise Inventory | 41000 |
May 7: Received $22,300 cash from Halstad Co. on account.
| Description | Debit | Credit | |
|---|---|---|---|
| Cash | 22300 | ||
| Accounts Receivable-Halstad Co. | 22300 |
May 10: Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.
| Description | Debit | Credit | |
|---|---|---|---|
| Cash | 54000 | ||
| Sales | 54000 | ||
| Cost of Merchandise Sold | 32000 | ||
| Merchandise Inventory | 32000 |
May 13: Paid for merchandise purchased on May 3.
| Description | Debit | Credit | |
|---|---|---|---|
| Accounts Payable-Martin Co. | 35280 | ||
| Cash | 35280 |
May 15: Paid advertising expense for last half of May, $11,000.
| Description | Debit | Credit | |
|---|---|---|---|
| Advertising Expense | 11000 | ||
| Cash | 11000 |
May 16: Received cash from sale of May 6.
| Description | Debit | Credit | |
|---|---|---|---|
| Cash | 67130 | ||
| Accounts Receivable-Korman Co. | 67130 |
May 19: Purchased merchandise for cash, $18,700.
| Description | Debit | Credit | |
|---|---|---|---|
| Merchandise Inventory | 18700 | ||
| Cash | 18700 |
May 19: Paid $33,450 to Buttons Co. on account.
| Description | Debit | Credit | |
|---|---|---|---|
| Accounts Payable-Buttons Co. | 33450 | ||
| Cash | 33450 |
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 | Debit | Credit | |
|---|---|---|---|
| Customers Refunds Payable | 13230 | ||
| Cash | 13230 | ||
| Merchandise Inventory | 8000 | ||
| Estimated Returns Inventory | 8000 |
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 | Debit | Credit | |
|---|---|---|---|
| Accounts Receivable-Crescent Co. | 108900 | ||
| Sales | 108900 | ||
| Cost of Merchandise Sold | 70000 | ||
| Merchandise Inventory | 70000 |
May 21: For the convenience of Crescent Co., paid freight on sale of May 20, $2,300.
| Description | Debit | Credit | |
|---|---|---|---|
| Accounts Receivable-Crescent Co. | 2300 | ||
| Cash | 2300 |
May 21: Received $42,900 cash from Gee Co. on account.
| Description | Debit | Credit | |
|---|---|---|---|
| Cash | 42900 | ||
| Accounts Receivable-Gee Co. | 42900 |
May 21: Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000.
| Description | Debit | Credit | |
|---|---|---|---|
| Merchandise Inventory | 87120 | ||
| Accounts Payable-Osterman Co. | 87120 |
May 24: Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.
| Description | Debit | Credit | |
|---|---|---|---|
| Accounts Payable-Osterman Co. | 4950 | ||
| Merchandise Inventory | 4950 |
May 26: Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800.
| Description | Debit | Credit | |
|---|---|---|---|
| Customers Refunds Payable | 7500 | ||
| Cash | 7500 | ||
| Merchandise Inventory | 4800 | ||
| Estimated Returns Inventory | 4800 |
May 28: Paid sales salaries of $56,000 and office salaries of $29,000.
| Description | Debit | Credit | |
|---|---|---|---|
| Sales Salaries Expense | 56000 | ||
| Office Salaries Expense | 29000 | ||
| Cash | 85000 |
May 29: Purchased store supplies for cash, $2,400.
| Description | Debit | Credit | |
|---|---|---|---|
| Store Supplies | 2400 | ||
| Cash | 2400 |
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.
| Description | Debit | Credit | |
|---|---|---|---|
| Accounts Receivable-Turner Co. | 77175 | ||
| Sales | 77175 | ||
| Cost of Merchandise Sold | 47000 | ||
| Merchandise Inventory | 47000 |
May 30: Received cash from sale of May 20 plus freight paid on May 21.
| Description | Debit | Credit | |
|---|---|---|---|
| Cash | 111200 | ||
| Accounts Receivable-Crescent Co. | 111200 |
May 31: Paid for purchase of May 21, less return of May 24.
| Description | Debit | Credit | |
|---|---|---|---|
| Accounts Payable-Osterman Co. | 82170 | ||
| Cash | 82170 |
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