From December 2021, Crystal Clear Cleaning has decided that, in addition to providing cleaning services, it will sell cleaning products. Crystal Clear uses the perpetual inventory system. December 31 is the end of each accounting period. During December 2020, Crystal Clear completed the following transactions:

Dec. 2 Purchased 1,000 units of inventory for $4,000 on account from Sparkle Company on terms, 5/10, n/20.

5 Purchased 1,200 units of inventory from Borax on account with terms 4/10, n/30. The total invoice was for $6,000, which included a $300 freight charge (FOB Shipping Point)

7 Returned 300 units of inventory to Sparkle from the December 2 purchase (cost $1,200).

9 Paid Borax.

11 Sold 500 units of goods to Happy Maids for $5,500 on account with terms n/30. Crystal Clears cost of the goods was $2,000.

12 Paid Sparkle.

15 Received 100 units with a retail price of $1,100 back from customer Happy Maids. The goods cost Crystal Clear $400.

21 Received payment from Happy Maids, settling the amount due in full.

28 Sold 500 units of goods to Bridget, Inc. on account for $6,500; cost $2,022. Terms 1/15, n/30.

29 Paid cash for utilities of $550. 30 Paid cash for Sales Commission Expense of $214.

31 Received payment from Bridget, Inc., less discount.

31 Recorded the following adjusting entries:

a. Physical count of inventory on December 31 showed 800 units of goods on hand, with a cost of $3,848.

b. Depreciation, $150.

c. Accrued salaries expense of $2,100.

d. Estimated sales returns of $1,500, with cost of $540.

e. Prepared all other adjustments necessary for December (Hint: You will need to review the adjustment information in Chapter 3 to determine the remaining adjustments). Assume the cleaning supplies left at December 31 are $50.

Requirements (cont.)

3. Journalize and post the December transactions. Compute each account balance. Identify each accounts payable and accounts receivable with the vendor or customer name.

4. Journalize and post the adjusting entries. Denote each adjusting amount as Adj. Compute each account balance, and denote the balance as Balance. After posting all adjusting entries, prove the equality of debits and credits in the ledger by preparing an adjusted trial balance.

5. Prepare the single step income statement and statement of owners equity for the month ended December 31, 2020. Also prepare a classified balance sheet at December 31, 2020. Assume the note payable is long-term.

6. Calculate gross profi