On December 31, 2019, Clean and White Linen Supplies Ltd had the following account balances Cash $90,000 Accumulated Depreciation, Equipment $90,000 Accounts Receivable 96,000 Accounts Payable 60,000 Inventory 60,000 Wages Payable 8,000 Supplies 2,000 Bank Loan Payable 150,000 Long Term Investment 80,000 Common Shares 250,000 Equipment 330,000 Retained Earnings 100,000 In 2020, the following transactions occurred 1 On January 1, paid $4,200 for a three year fire insurance policy 2 Purchased additional uniform inventory on credit for $147,100 3 Sold uniforms for $192,100 on account The inventory that was sold had been purchased for $100,000 4 Performed cleaning services for customers for $544,400 One quarter of this amount was paid in cash and the remainder was on account 5 Paid $139,200 to suppliers to settle some of the accounts payable 6 Received $246,000 from customers to settle amounts owed to the company 7 Paid $15,200 for advertising 8 At the end of 2020, paid the interest on the bank loan for the year at the rate of 7 , as well as $34,500 on the principal The remaining principal balance is due in three years 9 Received a $3,000 dividend from the long term investment 10 Paid $19,800 for utilities for the year 11 Declared and paid dividends of $13,100 at the end of the year 12 Paid $102,000 for wages during the year At year end, the company owed another $2,000 to the employees for the last week of work in December 13 Depreciated the equipment for the year The company had bought its equipment at the beginning of 2017, and it was expected to last 10 years and have a residual value of $30,000 The company depreciates its equipment using the straight line method 14 Made an adjustment for the cost of the insurance that expired in 2020 Prepare the closing entries (Credit account titles are automatically indented when the amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts ) Account Titles and Explanation Debit Credit (To close accounts with a credit balance) (To close accounts with a debit balance ) (To close Income summary account) (To close dividend account)

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Mar 13, 2024

On December 31, 2019, Clean and White Linen Supplies Ltd. had the following account balances: Cash $90,000 Accumulated Depreciation, Equipment $90,000 Accounts Receivable 96,000 Accounts

On December 31, 2019, Clean and White Linen Supplies Ltd. had the following account balances:

Cash	$90,000	Accumulated Depreciation, Equipment	$90,000
Accounts Receivable	96,000	Accounts Payable	60,000
Inventory	60,000	Wages Payable	8,000
Supplies	2,000	Bank Loan Payable	150,000
Long-Term Investment	80,000	Common Shares	250,000
Equipment	330,000	Retained Earnings	100,000

In 2020, the following transactions occurred:

1.		On January 1, paid $4,200 for a three-year fire insurance policy.
2.		Purchased additional uniform inventory on credit for $147,100.
3.		Sold uniforms for $192,100 on account. The inventory that was sold had been purchased for $100,000.
4.		Performed cleaning services for customers for $544,400. One-quarter of this amount was paid in cash and the remainder was on account.
5.		Paid $139,200 to suppliers to settle some of the accounts payable.
6.		Received $246,000 from customers to settle amounts owed to the company.
7.		Paid $15,200 for advertising.
8.		At the end of 2020, paid the interest on the bank loan for the year at the rate of 7%, as well as $34,500 on the principal. The remaining principal balance is due in three years.
9.		Received a $3,000 dividend from the long-term investment.
10.		Paid $19,800 for utilities for the year.
11.		Declared and paid dividends of $13,100 at the end of the year.
12.		Paid $102,000 for wages during the year. At year end, the company owed another $2,000 to the employees for the last week of work in December.
13.		Depreciated the equipment for the year. The company had bought its equipment at the beginning of 2017, and it was expected to last 10 years and have a residual value of $30,000. The company depreciates its equipment using the straight-line method.
14.		Made an adjustment for the cost of the insurance that expired in 2020.

Prepare the closing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit




(To close accounts with a credit balance)








(To close accounts with a debit balance.)


(To close Income summary account)


(To close dividend account)