Comprehensive Problem 2 Part 3: NOTE: You must complete parts 1 and 2 before completing part 3. Prepare an unadjusted trial balance. If an amount box does not require an entry, leave it blan Palisade Creek Co. Unadjusted Trial Balance May 31, 2017 Debit Balances Credit Balances Cash 99,430 Accounts Receivable 245,875 599,150 16,800 Merchandise Inventory Prepaid Insurance Store Supplies Store Equipment Accumulated Depreciation-Store Equipment 13,800 569,500 56,700 Accounts Payable 63,150 44,200 Customer Refunds Payable Salaries Payable Lynn Tolley, Capital Lynn Tolley, Drawing 685,300 135,000 Sales 5,376,205 3,013,000 720,800 292,000 Cost of Merchandise Sold Sales Salaries Expense Advertising Expense Depreciation Expense Store Supplies Expense Miscellaneous Selling Expense Office Salaries Expense 12,600 411,100 Rent Expense 88,700 Insurance Expense Miscellaneous Administrative Expense 7,800 6,225,555 6,225,555 Part 7: You must complete parts 1, 2, 3, 4 and 6 before completing part 7. Part 5 is the optional work sheet. Prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank. Palisade Creek Co. Adjusted Trial Balance May 31, 2017 Debit Balances Credit Balances 99,430 Cash Accounts Receivable 245,875 585,200 4,800 4,000 569,500 70,700 Merchandise Inventory Prepaid Insurance Store Supplies Store Equipment Accumulated Depreciation-Store Equipment Accounts Payable Customer Refunds Payable Salaries Payable Lynn Tolley, Capital Lynn Tolley, Drawing 63,150 13,600 685,300 135,000 Sales 5,316,205 3,026,950 727,800 292,000 14,000 Cost of Merchandise Sold Sales Salaries Expense Advertising Expense Depreciation Expense Store Supplies Expense Miscellaneous Selling Expense Office Salaries Expense Rent Expense 9,800 12,600 417,700 88,700 Insurance Expense 12,000 Miscellaneous Administrative Expense 7,800 6,253,155 6,253,155 Part 4 and 5: 12,000 4,000 Note: You must complete parts 1, 2 and 3 before attempting to complete part 4 and part 6. Part 5 is an optional work sheet. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete Part 6. a. Merchandise inventory on May 31 $585,200 b. Insurance expired during the year C. Store supplies on hand on May 31 d. Depreciation for the current year 14,000 e. Accrued salaries on May 31: Sales salaries $7,000 Office salaries f. The adjustment for customer refunds and allowances is $60,000. 6. Journalize the adjusting entries. If an amount box does not require an entry, leave it blank. Post the adjusting entries to the attached spreadsheet you used in parts 1 and 2. Page 22 6,600 13,600 Post. Date Description Debit Credit Ref. Adjusting Entries 2017 13,950 May 31 Cost of Merchandise Sold Merchandise Inventory 13,950 12,000 May 31 Insurance Expense Prepaid Insurance 12,000 9,800 May 31 Store Supplies Expense Store Supplies 9,800 14,000 May 31 Depreciation Expense Accumulated Depreciation-Store Equipment 14,000 7,000 May 31 Sales Salaries Expense Office Salaries Expense Salaries Payable 6,600 13,600 May 31 Sales 60,000 V Customer Refunds Payable 60,000 Palisade Creek Co. End-of-Period Spreadsheet (Work Sheet) For the Year Ended May 31, 2017 Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Account Title Debit Credit Debit Credit Debit Credit Debit Credit Cash 99,430 99,430 Accounts Receivable 245,875 245,875 Merchandise Inventory 599,150 13,950 585,200 Prepaid Insurance 16,800 12,000 4,800 Store Supplies 13,800 9,800 4,000 Store Equipment 569,500 569,500 Accum. Depr.-Store Equip. 56,700 14,000 70,700 Accounts Payable 63,150 63,150 Customer Refunds Payable 44,200 60,000 104,200 Salaries Payable 13,600 13,600 Lynn Tolley, Capital 685,300 685,300 Lynn Tolley, Drawing 135,000 135,000 Lynn Tolley, Drawing 135,000 135,000 Sales 5,376,205 60,000 5,316,205 5,316,205 x Cost of Merchandise Sold 3,013,000 13,950 3,026,950 3,026,950 x Sales Salaries Expense 720,800 7,000 727,800 727,800 x Advertising Expense 292,000 292,000 292,000 x Depreciation Expense 14,000 14,000 14,000 x Store Supplies Expense 9,800 9,800 9,800 X Miscellaneous Selling 12,600 12,600 12,600 x Expense Vffice Salaries Expense 411,100 6,600 417,700 417,700 X Kent Expense 88,700 88,700 88,700 x Insurance Expense 12,000 12,000 12,000 x Miscellaneous Admin. 7,800 7,800 7,800 X Expense Net Income 706,855 x 6,225,555 6,225,555 X 6,253,155 X 6,253,155 5,316,205 5,316,205 Balance Sheet Debit Credit 99,430 245,875 585,200 4,800 4,000 569,500 70,700 63,150 104,200 13,600 685,300 135,000 135,000 706,855 5,316,205 X 1,643,805 Part 8: You must complete parts 1, 2, 3, 4, 6 and 7 before attempting to complete part 8. Note: part 5 is optional. 1. Prepare an income statement. Palisade Creek Co. Income Statement For the Year Ended May 31, 2047 Sales Cost of merchandise sold Gross profit $ Expenses: Selling expenses: Sales salaries expense $ Advertising expense Store supplies expense Total selling expenses Administrative expenses: $ Total administrative expenses Total expenses Net income 2. Prepare a statement of owner's equity. Palisade Creek Co. Statement of Owner's Equity For the Year Ended May 31, 2017 Lynn Tolley, capital, June 1, 2016 Net income for the year Withdrawals Lynn Tolley, capital, May 31, 2017 $ 3. Prepare a balance sheet. Palisade Creek Co. Balance Sheet May 31, 2017 Assets Current assets: Cash Accounts receivable Merchandise inventory Prepaid insurance Store supplies Total current assets Property, plant, and equipment: Store equipment Less accumulated depreciation Total property, plant, and equipment Total assets Total current assets $ Property, plant, and equipment: Store equipment Less accumulated depreciation Total property, plant, and equipment Total assets Liabilities Current liabilities: Accounts payable Customer refunds payable Salaries payable Total liabilities Owner's equity Total liabilities and owner's equity