Pane in the Glass Company (Pane) is a glass manufacturer based out of California. They produce a number of glass products including car windows and windshields, windows for houses, stained glass windows, and a number of other specialty products. The following information pertains to the fiscal year ending December 31, 2018:

At the beginning of the 2018, the company's 1/1/2018 trial balance was as follows:

Other assumptions for the year a. Depreciation and amortization are computed using the straight line method. b. Pane uses a perpetual system to track their inventory. c. Pane uses the percentage of receivables method to estimate their bad debt expense d. Pane has a year end of December 31, 2018

Transactions:

A January 1: Pane purchases inventory on account to make stained glass windows. The contract has terms of 2/10, n/30. The goods were purchased under the shipping terms of FOB destination. Inventory Purchased $9,750,000 Shipping Cost $5,050 B January 3: Pane receives rent for the 2 years from a tenant who rents one of their empty warehouses. Total Rent Paid $63,000 C January 5: Pane pays for the inventory purchased in transaction A. D February 12: Pane purchased a one year insurance policy on account with coverage beginning on March 1. Insurance Policy $20,000 E March 1: Pane purchases additional inventory on account to make stained glass windows. The goods were purchased under the shipping terms of FOB shipping point. Inventory Purchased $12,325,000 Shipping Cost $9,000 F May 31: Pane sells window panes to customers. Some customers paid in cash, others purchased their goods on account. Pane uses the perpetual method to track their inventory. Cash Sales 5,367,000 Sales on account 40,054,000 Cost of Goods Sold 13,250,000 G June 1: Pane pays for the inventory purchased in transaction E. H July 1: Pane pays cash for a patent that will allow them to produce a revolutionary new window for boats and other marine vehicles called "T-Panes". Cost of Patent $90,000 Remaining legal life of patent (in years) 9 I July 28: Pane issued shares of common stock Number of shares 5,230 Par Value $2 Price Per Share $124 J August 6: Pane purchases land with cash. At the time of purchase, Pane also had to pay for survey fees related to the land. Cost of Land $124,000 Survey Fees $600 K November 1: Pane lends one of their employees $200,000 in exchange for a note receivable. The employee is required to pay Pane back for the principal and interest on September 1, 2019. Principal $200,000 Interest Rate 9% Maturity Date 9/1/2019 L November 15: Pane sales additional goods to customers on account. Sales on account $20,000,000 Cost of Goods Sold $6,350,000 M December 1: Pane purchases a piece of machinery with cash that will assist in making "T-Panes" Cost of Machinery $890,000 Installation Fees $4,250 Transportation Costs $1,030 N December 10: Pane collects a portion of their accounts receivable Amount collected $43,758,000 O December 18: Pane sold a piece of their equipment for $10,000 in exchange for cash. Sale Price $10,000 Equipment Historical Cost $55,000 Accumulated Depreciation for this equipment $38,000 P December 31: Pane paid the IRS their 2018 income tax. Income Tax Paid $2,000,000 Q The payroll information for the year is shown below. All salaries and wages were previously paid for in cash, however this activity has not been recorded on Pane's books. Number of Employees 200 Employee payment (daily) $175 Days worked in the current year 250 S On December 31, Pane was notified that their one of their customers filed bankruptcy and would not be able to pay off their $3,000 account receivable. T On December 31, Pane paid cash dividends of $8,000 to its shareholders.

Year-End Adjusting Entries: 1 Recognize the revenue earned from the rent paid in transaction B. 2 Recognize the expiration of the prepaid insurance policy, purchased in transaction D. 3 Recognize the interest earned on the note receivable issued in transaction K 4 Record the bad debt expense for the year, assuming uses 3% of accounts receivable to estimate their uncollectible accounts. 5 Depreciation Expense for the year is 2,556,000 6 Amortization Expense for the year is 3,000

Chart of Accounts:

Account Number	Account Title
100	Cash
110	Accounts Receivable
115	Allowance For Bad Debts
120	Inventory
130	Notes Receivable
135	Accumulated Depreciation
140	Equipment
160	Buildings
170	Land
180	Patents
185	Accumulated Amortization
190	Interest Receivable
195	Prepaid Insurance Expense
200	Accounts Payable
205	Unearned Rent Revenue
210	Salaries Payable
230	Dividends Payable
300	Common Stock
310	Additional Paid in Capital
340	Retained Earnings
400	Sales Revenue
405	Rent Revenue
410	Interest Revenue
415	Loss on Sale of Equipment
500	Cost of Goods Sold
510	Depreciation Expense
518	Amortization Expense
520	Bad Debt Expense
540	Salaries Expense
560	Insurance Expense
570	Interest Expense
599	Income Tax Expense
600	Dividends

Closing Journal Entries Needed

Number Title 100 Cash 110 Accounts Receivable 115 Allowance For Bad Debts 120 Inventory 135 Accumulated Depreciation 140 Equipment 160 Buildings 170 Land 180 Patents 185 Accumulated Amortization 200 Accounts Payable 300 Common Stock 310 Additional Paid In Capital 340 Retained Earnngs Credit $ $ Debit $ 450,000,000 $ 33,000,000 $ 12,345,000 $ 105,000,000 $ 1,000,000 $ 2,567,000 $ 80,000 $ $ $ $ $ $ 603,992,000 $ 1,240,000 72,422,000 50,000 70,050,000 120,000,000 267,000,000 73,230,000 603,992,000 Instructions: Prepare the closing journal entries for Pane Company. Once you have recorded the journal entries, post them to the "T-Accounts - Closing" tab. Journal Entries Account Name DR CR C1 Dr. Dr. Dr. To close the income statement accounts To close the Dividends account Check figures: Total debits should equal total credits. C2 Dr. Cr. Cr. Cr. Cr. Cr. Cr. Cr. Cr. Cr. Cr. Remember: your debit or credit to retained earnings in this journal entry should equal your net income on the income statement. Difference Number Title 100 Cash 110 Accounts Receivable 115 Allowance For Bad Debts 120 Inventory 135 Accumulated Depreciation 140 Equipment 160 Buildings 170 Land 180 Patents 185 Accumulated Amortization 200 Accounts Payable 300 Common Stock 310 Additional Paid In Capital 340 Retained Earnngs Credit $ $ Debit $ 450,000,000 $ 33,000,000 $ 12,345,000 $ 105,000,000 $ 1,000,000 $ 2,567,000 $ 80,000 $ $ $ $ $ $ 603,992,000 $ 1,240,000 72,422,000 50,000 70,050,000 120,000,000 267,000,000 73,230,000 603,992,000 Instructions: Prepare the closing journal entries for Pane Company. Once you have recorded the journal entries, post them to the "T-Accounts - Closing" tab. Journal Entries Account Name DR CR C1 Dr. Dr. Dr. To close the income statement accounts To close the Dividends account Check figures: Total debits should equal total credits. C2 Dr. Cr. Cr. Cr. Cr. Cr. Cr. Cr. Cr. Cr. Cr. Remember: your debit or credit to retained earnings in this journal entry should equal your net income on the income statement. Difference