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Concept explainers
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, liabilities, and common stock of the
business on November 1, 2013, are as follows: Cash, $39,000;
Receivable
$31,500; Common Stock, $50,000. Business transactions during
November are summarized as follows:
a. Beverly Zahn invested additional cash in exchange for common stock
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 customers for dry clearing 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. Paid dividends. $5,000
Instructions
1. Determine the amount of
2. State the assets, liabilities, and
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
stockholders' equity for November, and a
30.
4. (Optional) Prepare a statement of cash flows for November.
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