DLite Dry Cleaners is owned and operated by Joel Palk A buil

D’Lite Dry Cleaners is owned and operated by Joel Palk. 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 July 1, 2016, are as follows: Cash, $30,000; Accounts Receivable, $76,000; Supplies, $10,000; Land, $43,000; Accounts Payable, $32,500; Common Stock, $50,000. Business transactions during July are summarized as follows:

Paid dividends, $7,000.

A.	Joel Palk invested additional cash in exchange for common stock with a deposit of $23,000 in the business bank account.
B.	Purchased land adjacent to land currently owned by D\'Lite Dry Cleaners to use in the future as a parking lot, paying cash of $35,000.
C.	Paid rent for the month, $3,200.
D.	Charged customers for dry cleaning revenue on account, $73,000.
E.	Paid creditors on account, $19,800.
F.	Purchased supplies on account, $8,000.
G.	Received cash from cash customers for dry cleaning revenue, $37,000.
H.	Received cash from customers on account, $75,000.
I.	Received monthly invoice for dry cleaning expense for November (to be paid on December 10), $29,050.
J.	Paid the following: wages expense, $25,000; truck expense, $2,900; utilities expense, $1,300; miscellaneous expense, $1,400.
K.	Determined that the cost of supplies on hand was $9,300; therefore, the cost of supplies used during the month was $8,700.
L.	Paid dividends, $7,000.

Solution

Answer 1. Trial Balance July 1, 2016 Particulars Dr. Amt. Cr. Amt. Cash      30,000.00 Accounts Receivable      76,000.00 Supplies      10,000.00 Land      43,000.00 Accounts Payable      32,500.00 Common Stock      50,000.00 Retained Earnings (Bal. Fig.)      76,500.00 Total    159,000.00    159,000.00 Retained Earnings as on July 1, 2016 = 76,500 Answer 2. S.no. Assets = Liabilities + Stockholders\' Equity Income Statement Cash + Accounts Receivable + Supplies + Land = Accounts Payable + Common Stock + Retained Earnings Revenue - Expenses = Income Beg. Bal.       30,000.00 +      76,000.00 + 10,000.00 +         43,000.00 =         32,500.00 +    50,000.00 +      76,500.00                     -   -                     -   =                     -   a. 23000 + + + = + 23000 +                     -   - =                     -   Balance       53,000.00 +      76,000.00 + 10,000.00 +         43,000.00 =         32,500.00 +    73,000.00 +      76,500.00                     -   -                     -   =                     -   b.    (35,000.00) +                     -   +                  -   +         35,000.00 = + +                     -   - =                     -   Balance       18,000.00 +      76,000.00 + 10,000.00 +         78,000.00 =         32,500.00 +    73,000.00 +      76,500.00                     -   -                     -   =                     -   c.       (3,200.00) + + + = + +      (3,200.00)                     -   -        3,200.00 =      (3,200.00) Balance       14,800.00 +      76,000.00 + 10,000.00 +         78,000.00 =         32,500.00 +    73,000.00 +      73,300.00                     -   -        3,200.00 =      (3,200.00) d. +      73,000.00 + + = + +      73,000.00      73,000.00 -                     -   =      73,000.00 Balance       14,800.00 +    149,000.00 + 10,000.00 +         78,000.00 =         32,500.00 +    73,000.00 +    146,300.00      73,000.00 -        3,200.00 =      69,800.00 e.    (19,800.00) + + + =       (19,800.00) + + - =                     -   Balance       (5,000.00) +    149,000.00 + 10,000.00 +         78,000.00 =         12,700.00 +    73,000.00 +    146,300.00      73,000.00 -        3,200.00 =      69,800.00 f. + +     8,000.00 + =           8,000.00 + + - =                     -   Balance       (5,000.00) +    149,000.00 + 18,000.00 +         78,000.00 =         20,700.00 +    73,000.00 +    146,300.00      73,000.00 -        3,200.00 =      69,800.00 g.       37,000.00 + + + = + +      37,000.00      37,000.00 - =      37,000.00 Balance       32,000.00 +    149,000.00 + 18,000.00 +         78,000.00 =         20,700.00 +    73,000.00 +    183,300.00    110,000.00 -        3,200.00 =    106,800.00 h.       75,000.00 +    (75,000.00) + + = + + - =                     -   Balance    107,000.00 +      74,000.00 + 18,000.00 +         78,000.00 =         20,700.00 +    73,000.00 +    183,300.00    110,000.00 -        3,200.00 =    106,800.00 i. + + + =         29,050.00 + +    (29,050.00) -      29,050.00 =    (29,050.00) Balance    107,000.00 +      74,000.00 + 18,000.00 +         78,000.00 =         49,750.00 +    73,000.00 +    154,250.00    110,000.00 -      32,250.00 =      77,750.00 j.    (30,600.00) + + + = + +    (30,600.00) -      30,600.00 =    (30,600.00) Balance       76,400.00 +      74,000.00 + 18,000.00 +         78,000.00 =         49,750.00 +    73,000.00 +    123,650.00    110,000.00 -      62,850.00 =      47,150.00 k. + + (8,700.00) + = + +      (8,700.00) -        8,700.00 =      (8,700.00) Balance       76,400.00 +      74,000.00 +     9,300.00 +         78,000.00 =         49,750.00 +    73,000.00 +    114,950.00    110,000.00 -      71,550.00 =      38,450.00 l.       (7,000.00) + + + = + +      (7,000.00) - =                     -   Balance       69,400.00 +      74,000.00 +     9,300.00 +         78,000.00 =         49,750.00 +    73,000.00 +    107,950.00    110,000.00 -      71,550.00 =      38,450.00 Total Assets = $230,700 Total Liabilities = $49,750 Total stockholders\' Equity = $180,950 Total stockholders\' Equity = $230,700 Answer 3-a. Income Statement For the Month Ended July 31, 2016 Revenue Dry Cleaning revenue    110,000.00 Expenses Rent Expenses        3,200.00 Dry Cleaning Expenses      29,050.00 Wages Expenses      25,000.00 Truck Expenses        2,900.00 Utilities Expenses        1,300.00 Miscellaneous Expenses        1,400.00 Supplies Expenses        8,700.00      71,550.00 Net Income      38,450.00 Answer 3-b. Retained Earning Statement For the Month Ended July 31, 2016 Beginning Balance - July 1, 2016      76,500.00 Net Income      38,450.00 Dividend      (7,000.00) Ending Balance - July 31, 2016    107,950.00 Answer 3-c. Balance Sheet June 31, 2016 Assets Current Assets Cash      69,400.00 Accounts Receivable      74,000.00 Supplies        9,300.00 Total Current Assets    152,700.00 Property, Plant & Equipment Land      78,000.00 Total Assets    230,700.00 Liabilities & Stockholders\' Equity Liabilities Current Liabilities Accounts Payable      49,750.00 Long-Term Liabilities                     -   Total Liabilities Stockholders\' Equity Common Stock      73,000.00 Retained Earnings    107,950.00 Total Stockholders\' Equity    180,950.00 Total Liabilities & Stockholders\' Equity    230,700.00 Answer 4. Statement of Cash Flows (Indirect Method) For the Month ended July 31, 2016 Cash Flow from opearating activities: Net Income            38,450 Add/(Less) non cash effects on operating activities Decrease in Accounts Receivables              2,000 Decrease in Supplies                  700 Increase in Accounts Payables            17,250            19,950 Net Cash provided by operating activities            58,400 Cash flow from Investing Activities Purchase of Land          (35,000) Net Cash provided by Investing activities          (35,000) Cash Flow from Financing Activities Issue of Common Stock            23,000 Cash dividend paid            (7,000) Net Cash used by Financing activities            16,000 Net Increase / (Decrease) in Cash            39,400 Cash balance at the beginning - July 1, 2016            30,000 Cash balance at the end - July 31, 2016.            69,400