Palisade Creek Co. is a merchandising business that uses the perpetual inventory system

| March 31, 2017

Question
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:

Cash 83,600

Accounts Receivable 233,900

Merchandise Inventory 624,400

Estimated Returns Inventory 28,000

Prepaid Insurance 16,800

Store Supplies 11,400

Store Equipment 596,500

Accumulated Depreciation-Store Equipment 56,700

Accounts Payable 96,600

Salaries Payable – 0 –

Customers Refunds Payable 50,000

Common Stock 100,000

Retained Earnings 585,300

Dividends 135,000

Income Summary – 0 –

Sales 5,069,000

Cost of Merchandise Sold 2,823,000

Sales Salaries Expense 664,800

Advertising Expense 281,000

Depreciation Expense – 0 –

Store Supplies Expense – 0 –

Miscellaneous Selling Expense 12,600

Office Salaries Expense 382,100

Rent Expense 83,700

Insurance Expense – 0 –

Miscellaneous Administrative Expense 7,800

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.

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 of 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.

At the end of May, the following adjustment data were assembled.

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.

Requirements:Record the May business activities and adjustments to the journal.

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