PB34 Analyzing JournaIizing and Interpreting Business Activi

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 31^st. 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 21^st.

                  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 21^st.

                  Dec 29: The cleaning supplies ordered on December 3^rd were received today. DCC does

not have to pay for these supplies until January 29^th.

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 31^st.

Prepare a Trial Balance at 12/31/2017, prepare an Income Statement, Statement of Retained Earnings and a classified Balance Sheet.

Solution

If any doubt please comment.