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, 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 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.
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 ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 83,600 | |||
1 | 20 | 5,000 | |||||
4 | 20 | 600 | |||||
7 | 20 | 22,300 | |||||
10 | 20 | 54,000 | |||||
13 | 20 | 35,280 | |||||
15 | 20 | 11,000 | |||||
16 | 20 | 67,130 | |||||
19 | 20 | 18,700 | |||||
19 | 20 | 33,450 | |||||
20 | 20 | 13,230 | |||||
21 | 21 | 2,300 | |||||
21 | 21 | 42,900 | |||||
26 | 21 | 7,500 | |||||
28 | 21 | 85,000 | |||||
29 | 21 | 2,400 | |||||
30 | 21 | 111,200 | |||||
31 | 21 | 82,170 | 84,500 |
Table (1)
Accounts Receivable Account:
Accounts Receivable | Account No. 112 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
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 ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 624,400 | |||
3 | 20 | 35,280 | |||||
4 | 20 | 600 | |||||
6 | 20 | 41,000 | |||||
10 | 20 | 32,000 | |||||
19 | 20 | 18,700 | |||||
20 | 20 | 8,000 | |||||
20 | 21 | 70,000 | |||||
21 | 21 | 87,120 | |||||
24 | 21 | 4,950 | |||||
26 | 21 | 4,800 | |||||
30 | 21 | 47,000 | 583,950 | ||||
31 | Adjusting | 22 | 13,950 | 570,000 |
Table (3)
Estimated Returns Inventory Account:
Estimated Returns Inventory | Account No. 116 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
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 ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 16,800 | |||
31 | Adjusting | 22 | 12,000 | 4,800 |
Table (5)
Store Supplies Account:
Store Supplies | Account No. 118 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
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 ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 569,500 |
Table (7)
Accumulated Depreciation – Store Equipment Account:
Accumulated Depreciation – Store Equipment | Account No. 124 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
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 ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 96,600 | |||
3 | 20 | 35,280 | |||||
13 | 20 | 35,280 | |||||
19 | 20 | 33,450 | |||||
21 | 21 | 87,120 | |||||
24 | 21 | 4,950 | |||||
31 | 21 | 82,170 | 63,150 |
Table (9)
Salaries Payable Account:
Salaries Payable | Account No. 211 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
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 ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 50,000 | |||
20 | 20 | 13,230 | |||||
26 | 21 | 7,500 | 29,270 | ||||
31 | Adjusting | 22 | 60,000 | 89,270 |
Table (11)
Common Stock Account:
Common Stock | Account No. 310 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 100,000 |
Table (12)
Retained Earnings Account:
Retained Earnings | Account No. 311 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2017 | |||||||
June | 1 | Balance | ✓ | 585,300 | |||
2018 | |||||||
May | 31 | Closing | 23 | 741,855 | |||
31 | Closing | 23 | 135,000 | 1,192,155 |
Table (13)
Dividends Account:
Dividends | Account No. 312 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 135,000 | |||
31 | Closing | 23 | 135,000 |
Table (14)
Income Summary Account:
Income Summary | Account No. 313 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 31 | Closing | 23 | 5,316,205 | |||
31 | Closing | 23 | 4,574,350 | 741,855 | |||
31 | Closing | 23 | 741,855 |
Table (15)
Sales Account:
Sales | Account No. 410 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
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 (16)
Cost of Goods Sold Account:
Cost of Goods Sold | Account No. 510 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 2,823,000 | |||
6 | 20 | 41,000 | |||||
10 | 20 | 32,000 | |||||
20 | 21 | 70,000 | |||||
30 | 21 | 47,000 | 3,013,000 | ||||
31 | Adjusting | 22 | 13,950 | ||||
31 | Adjusting | 22 | 35,000 | 2,991,950 | |||
31 | Closing | 23 | 2,991,950 |
Table (17)
Sales Salaries Expense Account:
Sales Salaries Expense | Account No. 520 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 664,800 | |||
28 | 21 | 56,000 | 720,800 | ||||
31 | Adjusting | 22 | 7,000 | 727,800 | |||
31 | Closing | 23 | 727,800 |
Table (18)
Advertising Expense Account:
Advertising Expense | Account No. 521 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 281,000 | |||
15 | 20 | 11,000 | 292,000 | ||||
31 | Closing | 23 | 292,000 |
Table (19)
Depreciation Expense Account:
Depreciation Expense | Account No. 522 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 31 | Adjusting | 22 | 14,000 | 14,000 | ||
31 | Closing | 23 | 14,000 |
Table (20)
Stores Supplies Expense Account:
Stores Supplies Expense | Account No. 523 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 31 | Adjusting | 22 | 9,800 | 9,800 | ||
31 | Closing | 23 | 9,800 |
Table (21)
Miscellaneous Selling Expense Account:
Miscellaneous Selling Expense | Account No. 529 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 12,600 | |||
31 | Closing | 23 | 12,600 |
Table (22)
Office Salaries Expense Account:
Office Salaries Expense | Account No. 530 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 382,100 | |||
28 | 21 | 29,000 | 411,100 | ||||
31 | Adjusting | 22 | 6,600 | 417,700 | |||
31 | Closing | 23 | 417,700 |
Table (23)
Rent Expense Account:
Rent Expense | Account No. 531 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 83,700 | |||
1 | 20 | 5,000 | 88,700 | ||||
31 | Closing | 23 | 88,700 |
Table (24)
Insurance Expense Account:
Insurance Expense | Account No. 532 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 31 | Adjusting | 22 | 12,000 | 12,000 | ||
31 | Closing | 23 | 12,000 |
Table (25)
Miscellaneous Administrative Expense Account:
Miscellaneous Administrative Expense | Account No. 539 | ||||||
Date | Item |
Post. Ref. | Debit | Credit | Balance ($) | ||
Debit | Credit | ||||||
2018 | |||||||
May | 1 | Balance | ✓ | 7,800 | |||
31 | Closing | 23 | 7,800 |
Table (26)
1. And 2.
Record the journal entries.
Explanation of Solution
Date | Particulars | Post. Ref. | Page 20 | ||
Debit ($) | Credit ($) | ||||
2018 | |||||
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 (27)
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, 2018 | |||
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 (28)
4. and 6.
Record the adjusting entry.
Explanation of Solution
Date | Particulars |
Post. Ref. | Page 22 | ||
Debit ($) | Credit ($) | ||||
2018 | 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 (29)
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, 2018 | |||
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 (30)
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, 2018 | |||
Particulars | Amount ($) | Amount ($) | Amount ($) |
Sales | 5,316,205 | ||
Cost of goods sold | (2,991,950) | ||
Gross profit | 2,324,255 | ||
Expenses: | |||
Selling expenses: | |||
Sales salaries expense | 727,800 | ||
Advertising expense | 292,000 | ||
Depreciation expense | 14,000 | ||
Store supplies expense | 9,800 | ||
Miscellaneous selling expense | 12,600 | ||
Total selling expenses | 1,056,200 | ||
Administrative expenses: | |||
Office salaries expense | 417,700 | ||
Rent expense | 88,700 | ||
Insurance expense | 12,000 | ||
Miscellaneous administrative expense | 7,800 | ||
Total administrative expenses | 526,200 | ||
Total expenses | (1,582,400) | ||
Net income | 741,855 |
Table (31)
Prepare the retained earnings statement.
P Company Retained Earnings Statement For the Year Ended May 31, 2018 | ||
Retained earnings, June 1, 2017 | 585,300 | |
Net income | 741,855 | |
Dividends | (135,000) | |
Change in retained earnings | 606,855 | |
Retained earnings, May 31, 2018 | 1,192,155 |
Table (32)
Prepare the balance sheet of P Company.
P Company Balance Sheet As on May 31, 2018 | ||
Assets | Amount ($) | 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 | |
Stockholders’ Equity | ||
Common stock | $ 100,000 | |
Retained earnings | 1,192,155 | |
Total stockholders’ equity | 1,292,155 | |
Total liabilities and stockholders’ equity | $1,458,175 |
Table (33)
9.
Prepare the closing entries.
Explanation of Solution
Prepare the closing entries.
Date | Particulars |
Post. Ref. | Page 23 | ||
Debit ($) | Credit ($) | ||||
2018 | Closing Entries | ||||
May | 31 | Sales | 410 | 5,316,205 | |
Income Summary | 313 | 5,316,205 | |||
31 | Income Summary | 313 | 4,574,350 | ||
Cost of Goods Sold | 510 | 2,991,950 | |||
Sales Salaries Expense | 520 | 727,800 | |||
Advertising Expense | 521 | 292,000 | |||
Depreciation Expense | 522 | 14,000 | |||
Store Supplies Expense | 523 | 9,800 | |||
Miscellaneous Selling Expense | 529 | 12,600 | |||
Office Salaries Expense | 530 | 417,700 | |||
Rent Expense | 531 | 88,700 | |||
Insurance Expense | 532 | 12,000 | |||
Miscellaneous Administrative Expenses | 539 | 7,800 | |||
31 | Income Summary | 313 | 741,855 | ||
Retained Earnings | 311 | 741,855 | |||
31 | Retained Earnings | 311 | 135,000 | ||
Dividends | 312 | 135,000 |
Table (34)
10.
Prepare the post-closing trial balance.
Explanation of Solution
Prepare the post-closing trial balance.
P Company Post-Closing Trial Balance May 31, 2018 | |||
Accounts |
Account No. |
Debit Balances ($) |
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 | |
Common Stock | 310 | 100,000 | |
Retained Earnings | 311 | 1,192,155 | |
Total | 1,528,875 | 1,528,875 |
Table (35)
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, 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 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 the Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.arrow_forwardOn June 30, 2019, the balances of the accounts appearing in the ledger of Simkins Company are as follows: Instructions 1. Does Simkins Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Simkins Company for the year ended June 30, 2019. The merchandise inventory as of June 30, 2019, was 508,000. The adjustment for estimated returns inventory for sales for the year ending December 31, 2019, was 33,000. 3. Prepare the closing entries for Simkins Company as of June 30, 2019. 4. What would the net income have been if the perpetual inventory system had been used?arrow_forward
- On December 31, 2019, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Instructions 1. Does Wyman Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 2019. The merchandise inventory as of December 31, 2019, was 305,000. The adjustment for estimated returns inventory for sales for the year ending December 31, 2019, was 30,000. 3. Prepare the closing entries for Wyman Company as of December 31, 2019. 4. What would the net income have been if the perpetual inventory system had been used?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_forwardKelley 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_forward
- MacDonald 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. Total and rule the journal. 3. Prove the equality of the debit and credit totals.arrow_forwardRavilero Ltd uses the periodic inventory system and has control accounts and subsidiary ledgers for trade receivables and payables. The general ledger control account balances at 1 June 2019 were: Accounts receivable control $88,520 Accounts payable control 103,820 The following transactions took place during June: Credit inventory sales for the month $116,130 Cash inventory purchases for the month 83,900 Credit inventory purchases for the month 58,820 Cash payments to creditors for the month 115,520 Discount received for the month 2,740 Discount allowed for the month 2,130 Cash receipts from customers for the month 118,100 Cash inventory sales for the month 8,510 June 8: Goods (unpaid) returned by customer 8,440 June 11: Bill payable accepted by creditor in respect of balance of account 2,500 June 16: Goods (paid for) returned to supplier and received cash 6,460 June 21: Offset of accounts receivable and payable recorded 8,510…arrow_forwardSelected information from the statement of financial position of FAIRVIEW Company at November 30 and December 31, 2021 is presented below. The company uses the perpetual inventory system and all sales and purchases were made on credit. How much is the wages expense for the month of December?arrow_forward
- Prepare the journal entries to record the following transactions on Crane Company’s books using a perpetual inventory system. On March 2, Blue Company sold $999,000 of merchandise to Crane Company, terms 3/10, n/30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Creditarrow_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_forwardThe following were selected from among the transactions completed by Babcock Company during November of the current year. Babock uses the net method under a perpetual inventory system. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.arrow_forward
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