Squeaky Shine provides car washing services in Jersey City, New Jersey. A three-

Question

Squeaky Shine provides car washing services in Jersey City, New Jersey. A three-month pass for automatic car wash sells for $60, which entitles the customer for an unlimited number of car washes during the contract period. Squeaky Shine estimates that pass holders wash their cars equally throughout the three-month period. On December 1st, customers purchased $1,260 of the three-month passes, with purchases of the passes occurring evenly throughout December. Required: 1. Prepare the journal entries that Squeaky Shine would record on December 1 and on December 31, 2016, with respect to this transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) 2. State the account titles and amounts that will be included in Squeaky Shine’s 2016 income statement and balance sheet.

Explanation / Answer

1. Journal Entries

2. Income Statement (Extract)

Balance sheet (Extract)

Date Account titles and explanation Debit($) Credit($) 1 Dec,2016 Cash A/c Dr. $1260 To Defferd Service Revenue $1260 31.Dec,2016 Deffered Service Revenue A/c Dr. $420 To Service Revenue A/c $420

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