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Basic_Accounting_Concept_3_Questions_2_with_Answer

Squeaky Shine, a car wash service in Jersey City, sold $1,260 worth of three-month passes on December 1, 2021, allowing unlimited washes. The document outlines the required journal entries for December 1 and December 31, 2021, as well as the account titles for the income statement and balance sheet. Additionally, it details steps for recording transactions, adjusting entries, and preparing financial statements for the period ended December 31, 2021.

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j3172711
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15 views

Basic_Accounting_Concept_3_Questions_2_with_Answer

Squeaky Shine, a car wash service in Jersey City, sold $1,260 worth of three-month passes on December 1, 2021, allowing unlimited washes. The document outlines the required journal entries for December 1 and December 31, 2021, as well as the account titles for the income statement and balance sheet. Additionally, it details steps for recording transactions, adjusting entries, and preparing financial statements for the period ended December 31, 2021.

Uploaded by

j3172711
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Deferred Revenue

• 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 usage of the passes occurring evenly
throughout the contract period.

Required:
1. Prepare the journal entries that Squeaky Shine would record on
December 1 and on December 31, 2021, with respect to this
transaction.
2. State the account titles and amounts that will be included in
Squeaky Shine’s 2021 income statement and balance sheet.
Deferred Revenue
(Answer)
Comprehensive Problem
Requirement
• 1. Record each of the transactions listed above (these are shown
as items 1 - 9).

•
• 2. Record the adjusting entries (these are shown as items 10-12).

• 3. Review the adjusted 'Trial Balance' as of December 31, 2021.

• 4. Prepare an income statement for the period ended December


31, 2021

• 5. Prepare a classified balance sheet as of December 31, 2021


•
• 6. Record the closing entries (these are shown as items 13-15).
Requirement 1
Continued
Require
ment 2

Genera
l
Ledger
Trial Balance
Income Statement
Balance Sheets

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