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Transactions; financial statements Bev’s Dry Cleaners is owned and operated by Beverly Zahn. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets and the liabilities of the business on November 1, 2016, are as follows: Cash, $39,000; Accounts Receivable, $80,000; Supplies, $11,000; Land, $50,000; Accounts Payable, $31,500. Business transactions during November are summarized as follows: a. Beverly Zahn invested additional cash in the business with a deposit of $21,000 in the business bank account. b. Purchased land adjacent to land currently owned by Bev’s Dry Cleaners to use in the future as a parking lot, paying cash of $35,000. c. Paid rent for the month, $4,000. d. Charged customers for dry cleaning revenue on account, $72,000. e. Paid creditors on account, $20,000. f. Purchased supplies on account, $8,000. g. Received cash from cash customers for dry cleaning revenue, $38,000. h. Received cash from customers on account, $77,000. i. Received monthly invoice for dry cleaning expense for November (to be paid on December 10), $29,450. j. Paid the following: wages expense, $24,000; truck expense, $2,100; utilities expense, $1,800; miscellaneous expense, $1,300. k. Determined that the cost of supplies on hand was $11,800; therefore, the cost of supplies used during the month was $7,200. l. Withdrew $5,000 for personal use. Instructions 1. Determine the amount of Beverly Zahn’s capital as of November 1. 2. State the assets, liabilities, and owner’s equity as of November 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction. 3. Prepare an income statement for November, a statement of owner’s equity for November, and a balance sheet as of November 30. 4. (Optional) Prepare a statement of cash flows for November.

BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615
BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615

Solutions

Chapter
Section
Chapter 1, Problem 1.5BPR
Textbook Problem

Transactions; financial statements

Bev’s Dry Cleaners is owned and operated by Beverly Zahn. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets and the liabilities of the business on November 1, 2016, are as follows: Cash, $39,000; Accounts Receivable, $80,000; Supplies, $11,000; Land, $50,000; Accounts Payable, $31,500. Business transactions during November are summarized as follows:

  1. a. Beverly Zahn invested additional cash in the business with a deposit of $21,000 in the business bank account.
  2. b. Purchased land adjacent to land currently owned by Bev’s Dry Cleaners to use in the future as a parking lot, paying cash of $35,000.
  3. c. Paid rent for the month, $4,000.
  4. d. Charged customers for dry cleaning revenue on account, $72,000.
  5. e. Paid creditors on account, $20,000.
  6. f. Purchased supplies on account, $8,000.
  7. g. Received cash from cash customers for dry cleaning revenue, $38,000.
  8. h. Received cash from customers on account, $77,000.
  9. i. Received monthly invoice for dry cleaning expense for November (to be paid on December 10), $29,450.
  10. j. Paid the following: wages expense, $24,000; truck expense, $2,100; utilities expense, $1,800; miscellaneous expense, $1,300.
  11. k. Determined that the cost of supplies on hand was $11,800; therefore, the cost of supplies used during the month was $7,200.
  12. l. Withdrew $5,000 for personal use.

Instructions

  1. 1. Determine the amount of Beverly Zahn’s capital as of November 1.
  2. 2. State the assets, liabilities, and owner’s equity as of November 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction.
  3. 3. Prepare an income statement for November, a statement of owner’s equity for November, and a balance sheet as of November 30.
  4. 4. (Optional) Prepare a statement of cash flows for November.

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Chapter 1 Solutions

Accounting (Text Only)
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