Textbook Problem

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. 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. 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. 3. Prepare an unadjusted trial balance.
4. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).

1. 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet.
2. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal.
3. 7. Prepare an adjusted trial balance.
4. 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.
5. 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.
6. 10. Prepare a post-closing trial balance.