Crystal Clear Cleaning has decided that, in addition to providing cleaning services, it will sell cleaning products. Crystal Clear uses the perpetual inventory system. During December 2022, Crystal Clear completed the following transactions:

Required

1. If you did not complete Chapter 4, open the following T-accounts in the ledger: Cash, $51,650; Accounts Receivable, $4,000; Inventory, $0; Cleaning Supplies, $50; Prepaid Rent, $3,000; Prepaid Insurance, $4,400; Equipment, $5,400; Accumulated Amortization—Equipment, $80; Truck, $3,000; Accumulated Amortization—Truck, $70; Accounts Payable, $1,245; Salaries Payable, $0; Interest Payable, $59; Unearned Revenue, $14,375; Notes Payable, $36,000; A. Hideaway, Capital, $19,671; A. Hideaway, Withdrawals, $0; Service Revenue, $0; Sales Revenue, $0; Sales Discounts, $0; Sales Returns and Allowances, $0; Cost of Goods Sold, $0; Salaries Expense, $0; Sales Commission Expense, $0; Utilities Expense, $0; Amortization Expense, $0; Rent Expense, $0; Insurance Expense, $0; Interest Expense, $0. If you did complete the work on this problem in Chapter 4, then open the following new T-accounts with zero balances: Inventory, Sales Revenue, Sales Discounts, Sales Returns and Allowances, Cost of Goods Sold, and Sales Commission Expense.

2. Journalize and post the December transactions. Omit explanations. Compute each account balance and denote the balance as Balance. Identify each accounts payable and accounts receivable with the vendor or customer name in the journal entries. (For example, Accounts Payable—Sparkle Company.)

3. Journalize and post the adjusting entries. Omit explanations. 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.

4. Prepare the multi-step income statement and statement of owner’s equity for the month ended December 31, 2022. Also prepare a classified balance sheet at December 31, 2022. Assume the note payable is long-term. List expenses in the order they are shown in the adjusted trial balance.

5. Compute the gross profit percentage for December for the company.

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Dec. 2 5 7 9 11 12 15 21 28 29 30 31 31 Purchased 1,000 units of inventory for $4,000 on account from Sparkle Company on terms 5/10, n/20. 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. Returned 300 units of inventory to Sparkle from the December 2 purchase (cost $1,200). Paid Borax. No discount is applied on the freight charge. Sold 500 units of goods to Happy Maids for $5,500 on account with terms n/30. Crystal Clear's cost of the goods was $2,000. Paid Sparkle. Received 100 units with a retail price of $1,100 back from customer Happy Maids. The goods cost Crystal Clear $400. Received payment from Happy Maids, settling the amount due in full. Sold 500 units of goods to Bridget, Inc. on account for $6,500 (cost $2,022). Terms 1/15, n/30. Paid cash for utilities of $550. Paid cash for Sales Commission Expense of $214. Received payment from Bridget, Inc., less discount. 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. Amortization expenses include $80 for the equipment and $70 for the truck. Continue to use one expense account but separate contra-asset accounts. c. Accrued salaries expense of $2,100. d. Prepaid insurance in the amount of $400 expired. e. Prepaid rent in the amount of $1,000 was used. f. Interest of $180 should be accrued. g. $1,250 of unearned service revenue has been earned.