Question

During May, the last month of the fiscal year, the following transactions were completed:

Record the following transactions Refer to the Chart of Accounts for the exact wording of account titles.

CHART OF ACCOUNTS
Palisade Creek Co.
General Ledger
ASSETS 110 Cash 112 Accounts Receivable 115 Inventory 116 Estimated Returns Inventory 117 Prepaid Insurance 118 Store Supplies 123 Store Equipment 124 Accumulated Depreciation-Store Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 212 Customers Refunds Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary	REVENUE 410 Sales EXPENSES 510 Cost of Goods Sold 520 Sales Salaries Expense 521 Advertising Expense 522 Depreciation Expense 523 Store Supplies Expense 529 Miscellaneous Selling Expense 530 Office Salaries Expense 531 Rent Expense 532 Insurance Expense 539 Miscellaneous Administrative Expense

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 goods 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 goods 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. Refer to the Chart of Accounts for exact wording of account titles.

May	20	Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,000. The cost of the goods 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 goods 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.

Answer 1

Prepare the journal entries as follows

Date	Account Title and Explanation	Debit	Credit
May 1	Rent Expense	$5,000
	Cash		$5,000
	To record rent expense for the month of May
May 3	Inventory ($36,000 × (1 − 2%))	$35,280
	Accounts Payable - M Co.		$35,280
	To record purchases on account
May 4	Inventory	$600
	Cash		$600
	To record freight paid on inventory
May 6	Accounts Receivable - K Co. ($68,500 × (1 − 2%))	$67,130
	Sales Revenue		$67,130
	To record sales revenue on account
May 6	Cost of Goods Sold	$41,000
	Inventory		$41,000
	To record cost of goods sold
May 7	Cash	$22,300
	Accounts Receivable - H Co.		$22,300
	To record cash collected on account
May 10	Cash	$54,000
	Sales Revenue		$54,000
	To record merchandise sold
May 10	Cost of Goods Sold	$32,000
	Inventory		$32,000
	To record cost of goods sold
May 13	Accounts Payable - M Co. ($36,000 × (1 − 2%))	$35,280
	Cash		$35,280
	To record cash paid on account
May 15	Advertisement Expense	$11,000
	Cash		$11,000
	To record advertisement expense paid
May 16	Cash ($68,500 × (1 − 2%))	$67,130
	Accounts Receivable - K Co.,		$67,130
	To record cash collected on account
May 19	Inventory	$18,700
	Cash		$18,700
	To record merchandise inventory purchased
May 19	Accounts Payable - B Co.	$33,450
	Cash		$33,450
	To record cash paid on account
May 20	Customer Refunds Payable	$13,230
	Cash		$13,230
	To record customer refunded
May 20	Inventory	$8,000
	Estimated Returns Inventory		$8,000
	To record cost of inventory returned
May 20	Accounts Receivable C Co. ($110,000 × (1 − 1%))	$108,900
	Sales Revenue		$108,900
	To record sales revenue on account
May 20	Cost of Goods Sold	$70,000
	Inventory		$70,000
	To record cost of goods sold
May 21	Accounts Receivable C Co.	$2,300
	Cash		$2,300
	To record freight paid on behalf of customer
May 21	Cash	$42,900
	Accounts Receivable G Co.		$42,900
	To record cash collected on account
May 21	Inventory ($88,000 × (1 − 1%))	$87,120
	Accounts Payable - O Co.		$87,120
	To record purchases on account
May 24	Accounts Payable - O Co. ($5,000 × (1 − 1%))	$4,950
	Inventory		$4,950
	To record damaged inventory returned
May 26	Customer Refunds Payable	$7,500
	Cash		$7,500
	To record customer refunded
May 26	Inventory	$4,800
	Estimated Returns Inventory		$4,800
	To record cost of inventory returned
May 28	Sales Salaries Expense	$56,000
	Office Salaries Expense	$29,000
	Cash ($56,000 + $29,000)		$85,000
	To record salaries paid
May 29	Store Supplies	$2,400
	Cash		$2,400
	Record supplies purchased
May 30	Accounts Receivable T Co. ($78,750 × (1 − 2%))	$77,175
	Sales Revenue		$77,175
	To record sales revenue on account
May 30	Cost of Goods Sold	$47,000
	Inventory		$47,000
	To record cost of goods sold
May 30	Cash ($108,900 + $2,300)	$111,200
	Accounts Receivable C Co.		$111,200
	To record cash collected on account
May 31	Accounts Payable - O Co. ($87,120 − $4,950)	$82,170
	Cash		$82,170
	To record cash paid on account