Transactions; Financial Statements Bev\'s Dry Cleaners is owned and operated by

Question

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 for a fee. The assets and the liabilities of the business on November 1, 2019, 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: Beverly Zahn invested additional cash in the business with a deposit of $21,000 in the business bank account. 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. Paid rent for the month, $4,000. Charged customers for dry cleaning revenue on account, $72,000. Paid creditors on account, $20,000. Purchased supplies on account, $8,000. Received cash from cash customers for dry cleaning revenue, $38,000. Received cash from customers on account, $77,000. Received monthly invoice for dry cleaning expense for November (to be paid on December 10), $29,450. Paid the following: wages expense, $24,000; truck expense, $2,100; utilities expense, $1,800; miscellaneous expense, $1,300. Determined that the cost of supplies on hand was $11,800; therefore, the cost of supplies used during the month was $7,200. Withdrew $5,000 for personal use. Required: 1. Determine the amount of Beverly Zahn's capital as of November 1. $ 2. Use the attached spreadsheet to complete part 2. Click on the Spreadsheet icon above to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem. The assets, liabilities, and owner's equity as of November 1 are presented 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. Using the balances from the spreadsheet, prepare an income statement for November, a statement of owner's equity for November, and a balance sheet as of November 30. Income Statement 1 2 3 $ 4 5 6 7 8 9 10 11 $ Statement of Owner's Equity 1 $ 2 $ 3 4 5 6 $ Balance sheet as of November 30: When entering assets, enter them in order of liquidity. Balance Sheet 1 2 $ $ 3 4 5 6 $ $ 4. Prepare a statement of cash flows for November: Use the minus sign to indicate cash outflows, decreases in cash, and cash payments. Statement of Cash Flows 1 Cash flows from operating activities: 2 $ 3 4 Net cash flow from operating activities $ 5 Cash flows used for investing activities: 6 7 Cash flows from financing activities: 8 $ 9 10 Net cash flow from financing activities 11 Net Increase in cash during November $ 12 Cash balance, November 1, 2019 13 Cash balance, November 30, 2019 $

Explanation / Answer

Calculation of capital account balance on Nov.1 is the balancing figure of all assets less liabilities:

Cash flow statement:

Balance sheet Liabilities and stockholders equity Amount Assets Amount Liabilities Current assets Salaries and wages payable Accounts receivable           80,000 Notes payable Cash           39,000 Accounts payable           31,500 Inventory Total liabilities           31,500 Prepaid rent Supplies           11,000 Stockholders equity Capital account        1,48,500 Total current assets        1,30,000 Total stockholders equity        1,48,500 Property plant and equipment Land           50,000 Total liabilities and stockholders equity        1,80,000 Total assets        1,80,000

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