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

In 2020, the following transactions occurred:

1. On January 1, paid $3,900 for a three-year fire insurance policy.

2. Purchased additional uniform inventory on credit for $120,000.

3. Sold uniforms for $180,000 on account. The inventory that was sold had been purchased for $100,000.

4. Performed cleaning services for customers for $520,000. One-quarter of this amount was paid in cash and the remainder was on account.

5. Paid $130,000 to suppliers to settle some of the accounts payable.

6. Received $246,000 from customers to settle amounts owed to the company.

7. Paid $12,000 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 $30,000 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 $15,000 for utilities for the year.

11. Declared and paid dividends of $12,000 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.

14. Made an adjustment for the cost of the insurance that expired in 2020.

Required

a. Prepare journal entries to record each of the above transactions and adjustments.

b. Create T accounts. Enter the beginning balances from 2019, post the 2020 journal entries, and determine the ending balances for 2020.

c. Prepare an adjusted trial balance, and ensure that the total of the debit balances is equal to the total of the credit balances.

d. Prepare a statement of income for 2020.

e. Prepare the closing entries and post them to the T accounts.

f. Prepare a statement of financial position for 2020.

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