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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 for a fee. The assets and the liabilities of the business on November $1,20$Y$6,$ 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:

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$1.$ Determine the amount of Beverly Zahn's capital as of November $1.$

$fill in the blank c$49$d$8$af$3$afd$9$fc$4\_1$

$148,500$

$2.$ 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.

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$1.$ Insert the beginning balances into the accounting equation $($Assets $=$ Liabilities $+$ Owner's Equity$)$ to calculate the owner's equity.

$2.$ Use Transactions $($a$)$ to $($h$)$ summarized on page $18$ in the text to help you prepare the increases and decreases to the accounting equation in the tabular format. Recall that the effect of every transaction must modify the accounting equation, yet cause it to remain in balance overall. Assets are items owned by the company, while liabilities are debts owed to creditors, and owner's equity represents the rights of the owner.

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$3.$ 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

Bev's Dry Cleaners

Income Statement

For the Month Ended November $30,20$Y$6$

$1$

Dry cleaning revenue

$ fill in the blank $90481204$efd$1013\_5$

$2$

Expenses

$3$

Dry cleaning expense

$ fill in the blank $90481204$efd$1013\_8$

$4$

Wages expense

fill in the blank $90481204$efd$1013\_10$

$5$

Supplies expense

fill in the blank $90481204$efd$1013\_12$

$6$

Rent expense

fill in the blank $90481204$efd$1013\_14$

$7$

Truck expense

fill in the blank $90481204$efd$1013\_16$

$8$

Utilities expense

fill in the blank $90481204$efd$1013\_18$

$9$

Miscellaneous expense

fill in the blank $90481204$efd$1013\_20$

$10$

Total expenses

fill in the blank $90481204$efd$1013\_22$

$11$

Net income

$ fill in the blank $90481204$efd$1013\_24$

Statement of Owner's Equity

Bev's Dry Cleaners

Statement of Owner's Equity

For the Month Ended November $30,20$Y$6$

$1$

Beverly Zahn, capital, November $1,20$Y$6$

$ fill in the blank $90481204$efd$1013\_29$

$2$

Additional investment during November

$ fill in the blank $90481204$efd$1013\_31$

$3$

Net income for November

fill in the blank $90481204$efd$1013\_33$

$4$

Withdrawals

fill in the blank $90481204$efd$1013\_35$

$5$

Increase in owner's equity

fill in the blank $90481204$efd$1013\_37$

$6$

Beverly Zahn, capital, November $30,20$Y$6$

$ fill in the blank $90481204$efd$1013\_39$

Balance sheet as of November $30$:

When entering assets, enter them in order of liquidity.

Balance Sheet

Bev's Dry Cleaners

Balance Sheet

November $30,20$Y$6$

$1$

Assets

Liabilities

$2$

Cash

$ fill in the blank $90481204$efd$1013\_46$

Accounts payable

$ fill in the blank $90481204$efd$1013\_48$

$3$

Accounts receivable

fill in the blank $90481204$efd$1013\_50$

$4$

Supplies

fill in the blank $90481204$efd$1013\_52$

Owner's Equity

$5$

Land

fill in the blank $90481204$efd$1013\_55$

Beverly Zahn, capital

fill in the blank $90481204$efd$1013$