PB3-4 Analyzing, JournaIizing and Interpreting Business Activities (LO 3-3, 3-5
ID: 2605386 • Letter: P
Question
PB3-4 Analyzing, JournaIizing and Interpreting Business Activities (LO 3-3, 3-5 & then some) -
The following items present a sample of business activities involving Dry Cleaner Corporation (DCC) for the year ended December 31st. DCC provides cleaning services for individual customers and for employees of several large companies in the city.
Dec 1: DCC’s owner paid $10,000 cash to acquire 200 of DCC’s common shares.
Dec 2: DCC borrows $2,000 cash from BofA and signs a promissory note to repay the
principal and interest at 1% per annum on December 1, 2018.
Dec 3: DCC ordered cleaning supplies at a total cost of $2,000. The supplies are
expected to be received in early January.
Dec 4: DCC paid $1,500 cash to its landlord which consisted of December’s Rent of
$1,000 and a Security Deposit of $500.
Dec 7: Customers paid $200 cash to DCC to obtain DCC gift cards that they could use to
obtain future cleaning services at no additional cost.
Dec 15: Customers paid $1,000 cash to DCC for cleaning services performed during the
first two weeks of December.
Dec 21: DCC ran advertising in the local newspaper today at a total cost of $500. DCC is
not required to pay for the advertising until January 21st.
Dec 22: DCC paid $1,000 to the landlord for January rent.
Dec 23: DCC’s owner sold 20 of his own DSS common shares to a private investor, at a
selling price of $1,200.
Dec 28: DCC paid in full for the advertising run in the local newspaper on December 21st.
Dec 29: The cleaning supplies ordered on December 3rd were received today. DCC does
not have to pay for these supplies until January 29th.
Dec 31: Today, DCC completed cleaning services for several large companies at a total price of $2,000. The companies are expected to pay for the services by January 31st.
Prepare a Trial Balance at 12/31/2017, prepare an Income Statement, Statement of Retained Earnings and a classified Balance Sheet.
Explanation / Answer
If any doubt please comment.
Trial Balance As on 12/31/2017 Dr Cr Cash $10,200 Accounts Receivable 2000 Cleaning supples 2000 Prepaid rent 1000 Securities deposit 500 Accounts Payable 2000 Gift card Liabilities 200 Notes payable 2000 Common stock 10000 Cleaning services revenue 3000 Advertising expenses 500 Rent expenses 1000 Total $17,200 $17,200 Income Statement Cleaning services revenue 3000 Less: Advertising expenses 500 Rent expenses 1000 Total expenses 1500 Net Income 1500 Statement of Retained Earnings Opening Balance $0 Add: Net Income 1500 Ending Balance $1,500 Balance Sheet Assets Current Assets Cash $10,200 Accounts Receivable 2000 Cleaning supples 2000 Prepaid rent 1000 Securities deposit 500 Total current assets $15,700 Total Assets $15,700 Liabilities & Stockholder Equity Accounts Payable 2000 Gift card Liabilities 200 Notes payable 2000 Total current liabilities 4200 Stockholder Equity Common stock 10000 Retained Eranings 1500 Total stockholder Equity 11500 Total Liabilities & Stockholder Equity 15700Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.