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5 (13 marks) Cleaning Expert Company Limited (CEL) provides office cleaning service to customers. CEL had the following information for the month ended 31 January
5 (13 marks) Cleaning Expert Company Limited ("CEL") provides office cleaning service to customers. CEL had the following information for the month ended 31 January 2020. Transaction 1: CEL performed office cleaning service of $1,500 to XYZ Company on 15 January 2020, but XYZ Company will pay for the service on 1 February 2020. Transaction 2: CEL paid for an insurance policy of $120,000 in cash on 1 January 2020, covering the period from 1 January 2020 to 31 December 2020. Transaction 3: Ho and Chen CPA Limited provided tax consulting service of $20,000 to CEL on 15 January 2020 and CEL will settle this bill on 15 February 2020. Transaction 4: CEL received $1,500 from a customer on 10 January 2020 for office cleaning service that will be carried on 5 February 2020. Required: a. What is the main purpose of preparing adjusting entries at the end of the accounting period? (1 mark) b. Prepare the journal entries with narrations for CEL for Transactions 1, 2, 3 and 4 in this question. (12 marks) [Total marks for Question 5: 13 marks]
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