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Karen Noonan opened Clean Sweep Inc. on February 1, 2019. During February, the following transactions were completed. 2/1 Issued 5,000 shares of Clean Sweep common
Karen Noonan opened Clean Sweep Inc. on February 1, 2019. During February, the following transactions were completed.
- 2/1 Issued 5,000 shares of Clean Sweep common stock for $13,000. Each share has a $1.50 par.
- 2/1 Borrowed $8,000 on a 2-year, 6% note payable.
- 2/1 Paid $9020 to purchase used floor and window cleaning equipment from a company going out of business ($4,820 was for the floor equipment and $4,200 for the window equipment).
- 2/1 Paid $220 for February internet and phone services.
- 2/3 Purchased cleaning supplies for $980 on account.
- 2/4 Hired 4 employees. Each will be paid $480 per 5-day work week (Monday-Friday). Employees will begin working Monday, February 9.
- 2/5 Obtained insurance coverage for $9,840 per year. Coverage runs from February 1, 2019 through January 31, 2020. Karen paid $2,460 cash for the first quarter of coverage.
- 2/5 Discussions with the insurance agent indicated that providing outside window cleaning services would cost too much to insure. Karen sold the window cleaning equipment for $3,950 cash.
- 2/16 Billed customers $3,900 for cleaning services performed through February 13, 2019.
- 2/17 Received $540 from a customer for 4 weeks of cleaning services to begin February 21, 2019.
- 2/18 Paid $300 on amount owed on cleaning supplies.
- 2/20 Paid $3 per share to buy 300 shares of Clean Sweep common stock from a shareholder who disagreed with management goals. The shares will be held as treasury shares.
- 2/23 Billed customers $4,300 for cleaning services performed through February 20.
- 2/24 Paid cash for employees' wages for 2 weeks (February 9-13 and 16-20).
- 2/25 Collected $2,500 cash from customers billed on February 16.
- 2/27 Paid $220 for internet and phone services for March.
- 2/28 Declared and paid a cash dividend of $0.20 per share.
Question:
- Provide journal entries for the February transactions.
- Complete a worksheet that includes the following adjustments (There are a few steps that you need to take in order to come up with the correct balances in the first column of the worksheet, but you don't need to submit them.)
- Services performed for customers through February 27, 2019, but unbilled and uncollected were $3,800.
- Received notice that a customer who was billed $200 for services performed February 10 has filed for bankruptcy, Clean Sweep does not expect to collect any portion of this outstanding receivable.
- Clean Sweep uses the allowance method to estimate bad debts. Clean Sweep estimates that 3% of its month-end receivables will not be collected.
- Record 1 month of depreciation for the floor equipment. Use the straight-line method, an estimated life of 4 years, and $500 salvage value.
- Record 1 month of insurance expense.
- An inventory count shows $400 of supplies on hand at February 28.
- One week of services were performed for the customer who paid in advance on February 17.
- Accrue for wages owed through February 28, 2019.
- Accrue for interest expense for 1 month.
- Prepare properly formatted financial statements (multiple-step income statement, statement of retained earnings and classified balance sheet)
- Provide closing entries.
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