The following items present a sample of business activities involving Dry Cleane
ID: 2594820 • Letter: T
Question
The following items present a sample of business activities involving Dry Cleaner Corporation (DCC) for the year ended December 31. DCC provides cleaning services for individual customers and for employees of several large companies in the city.
DCC’s owner paid $9,450 cash to acquire 270 of DCC's common shares.
DCC ordered cleaning supplies at a total cost of $1,640. The supplies are expected to be received in early January.
Customers paid $210 cash to DCC to obtain DCC gift cards that they could use to obtain future cleaning services at no additional cost.
DCC ran advertising in the local newspaper today at a total cost of $520. DCC is not required to pay for the advertising until January 21.
DCC paid $1,300 to the landlord for January rent.
DCC’s owner sold 15 of his own DSS common shares to a private investor, at a selling price of $675.
DCC paid in full for the advertising run in the local newspaper on December 21.
The cleaning supplies ordered on December 7 were received today. DCC does not have to pay for these supplies until January 29.
Today, DCC completed cleaning services for several large companies at a total price of $2,400. The companies are expected to pay for the services by January 31.
The following items present a sample of business activities involving Dry Cleaner Corporation (DCC) for the year ended December 31. DCC provides cleaning services for individual customers and for employees of several large companies in the city.
[The following information applies to the questions displayed below. The following items present a sample of business activities involving Dry Cleaner Corporation (DCC) for the year ended December 31. DCC provides cleaning services for individual customers and for employees of several large companies in the city. Dec 1: DCC's owner paid $9,450 cash to acquire 270 of DCC's common shares. Dec7: DCC ordered cleaning supplies at a total cost of $1,640. The supplies are expected to be received in early January. cleaning services at no additional cost. for the advertising until January 21. Dec 17: Customers paid $210 cash to DCC to obtain DCC gift cards that they could use to obtain future Dec 21: DCC ran advertising in the local newspaper today at a total cost of $520. DCC is not required to pay Dec 22: DCC paid $1,300 to the landlord for January rent. Dec 23: DCC's owner sold 15 of his own DSS common shares to a private investor, at a selling price of $675. Dec 28: DCC paid in full for the advertising run in the local newspaper on December 21 Dec 29: The cleaning supplies ordered on December 7 were received today. DCC does not have to pay for these supplies until January 29. Dec 31: Today, DCC completed cleaning services for several large companies at a total price of $2,400. The companies are expected to pay for the services by January 31.Explanation / Answer
Accounting Equation Assets = Liabilities + Stockholder's equity Cash Investment Goods in transit Inventory Accounts receivable Accounts Payable Outstanding Advertising Other Income Expenses Profit & loss Srvice Revenue 1-Dec (9,450) 9,450 7-Dec 1,640 1,640 17-Dec 210 210 21-Dec 520 (520) 22-Dec (1,300) (1,300) 23-Dec 675 (525) 150 28-Dec (520) (520) 29-Dec (1,640) 1,640 31-Dec 2,400 2,400 (10,385) 8,925 - 1,640 2,400 1,640 - 210 (1,820) 150 2,400 2,580 = 1,640 + 940 Journal Entries 1-Dec Investment A/c Dr 9,450 To Cash A/c 9,450 (Being 270 common shares acquired by DCC owner) 7-Dec Purchases (goods in transit) a/c Dr 1,640 To Accounts payable A/c 1,640 (Being cleaning supplies ordered to be received in January) 17-Dec Cash A/c Dr 210 To Other Income (Gift cards) 210 (Being gift cards sold to customers for future cleaning services) 21-Dec Advertising A/c Dr 520 To Outstanding Advertising Expense A/c 520 (Being amount due for advertising expense till January 21) 22-Dec Prepaid Rent A/c Dr 1,300 To Cash A/c 1,300 (Being cash paid for January rent) 23-Dec Cash A/c Dr 675 To investment A/c 525 To Profit and loss a/c 150 (Being 15 of common shares sold) 28-Dec Outstanding Advertising Expense A/c Dr 520 To Cash A/c 520 (Being outstanding expense paid) 29-Dec Purchase A/c Dr 1,640 To Purchases (goods in transit) A/c 1,640 (Being goods in transit received) 31-Dec Accounts Receivable A/c Dr 2,400 To Service Revenue A/c 2,400 (Being service revenue recognised to be received by January 31)
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