A dog training business began on December 1. The following transactions occurred during its first month. December
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A dog training business began on December 1. The following transactions occurred during its first month.
December 1 | Receives $23,000 cash as an owner investment in exchange for common stock. |
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December 2 | Pays $6,360 cash for equipment. |
December 3 | Pays $3,780 cash (insurance premium) for a 12-month insurance policy. Coverage began on December 1. |
December 4 | Pays $1,060 cash for December rent expense. |
December 7 | Provides all-day training services for a large group and immediately collects $1,250 cash. |
December 8 | Pays $215 cash in wages for part-time help. |
December 9 | Provides training services for $2,460 and rents training equipment for $630. The customer is billed $3,090 for these services. |
December 19 | Receives $3,090 cash from the customer billed on Dec. 9. |
December 20 | Purchases $2,030 of supplies on credit from a supplier. |
December 23 | Receives $1,660 cash in advance of providing a 4-week training service to a customer. |
December 29 | Pays $1,315 cash as a partial payment toward the accounts payable of Dec. 20. |
December 30 | Distributed a $515 cash dividend to the owner. |
Information for month-end adjustments follows:
December 31 | One month of the 12-month, $3,780 insurance policy is expired by December 31. This leaves $3,465 not yet expired. |
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December 31 | A physical count of supplies on December 31 shows that only $1,215 of supplies remain of the $2,030 supplies purchased. |
December 31 | The $6,360 of equipment purchased at the beginning of December has a useful life of 5 years and will be worth nothing at the end of 5 years (60 months). The business uses straight-line depreciation to allocate the $6,360 net cost over 60 months. On December 31, 1 month of depreciation must be recorded. |
December 31 | The business agreed on December 23 to provide a 4-week training service to a customer for a fixed fee of $1,660 paid in advance. By December 31, the business has provided 1 of the 4 weeks of services and earned one-fourth of the fee. No revenue is yet recorded. |
December 31 | On December 31, wages of $615 are owed to a part-time employee for work done over the past 3 weeks. Those wages are not yet paid or recorded. |
December 31 | The business agreed to provide 6 weeks of training services to a customer for a fee of $4,290, or $715 per week. The customer agrees to pay the full $4,290 at the end of 6 weeks when services are complete. By December 31, 2 weeks of services have been provided, but the business has not yet billed the customer or recorded the 2 weeks of services provided. |
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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