PR 15B Transactions financial statements Obj 4 5 v3 Net inco

PR 1-5B Transactions; financial statements Obj. 4, 5 v3. Net income: Bev\'s Dry Cleaners is owned and operated by Beverly Zahn. A building and equipment are 40,10 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, 2018, are as follows: Cash, $39,000; Accounts Receivable, $80,000; Supplies, $11,000, Land, $50,000; Accounts Payable, $31,500; Common Stock, $50,000. Business KC TEMPLATE transactions during November are summarized as follows A. Beverly Zahn invested additional cash in exchange far 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. Pald rent for the month, $4,000. D· Changed customers for dry cleaning revenue on account, $72,000. E. Pald creditors on account, $20,000. F. Purchased supplies on account, $8,000. G. Received cash from customers for dry cleaning revenue, $38,000. H. Received cash from customers on account, $77,000. L. Received monthly invoice for dry dleaning expense for November (to be paid on December 10 $29,450. J. Palid 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 dvidends, $5,000. 1. Determine the amount of retained earnings as of November 1. 2. State the assets, liahilities, and stockholders\' 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 retained earnings statement for November, and a balance sheet as of November 30. i. COptiona) Prepare a statement of cash flows for November

Solution

Balance sheet as on November 1 as on November 30 Asset Current assets Cash 39000 81800 Accounts Receivable 80000 75000 Supplies 11000 11800 Total of current assets 130000 168600 Non-current assets Land 50000 85000 Total of Non current assets 50000 85000 Total of assets 180000 253600 Liabilities Current Liabilities Accounts Payable 31500 48950 Total current liabilities 31500 48950 Stockholder\'s equity Common stock 50000 71000 Requirement 1 Retained earnings(Balancing figure) 98500 133650 Total stockholder\'s equity 148500 204650 Total Liability and stockholder\'s equity 180000 253600 Requirement 3 Income statement for November Sales 110000 Cost of services 29450 Gross profit 80550 Expenses Rent 4000 Supplies 7200 Utilties 1800 Wage expense 24000 Truck expense 2100 Miscellanous expese 1300 Net Income 40150 Statement of retained earnings Retained earning as on November 1 98500 Net Income from Income summery 40150 Less : Payment of Dividends 5000 133650 Requirement 2 Description Asset Liabilties Stockholder\'s equity Serial No. Cash Accounts receivable supplies Land Accounts payable Common stock Retained earnings Balances on November 1 39000 80000 11000 50000 31500 50000 98500 A Additional Investment 21000 21000 New Balance 60000 80000 11000 50000 31500 71000 98500 B Purchase of additonal Land -35000 35000 New Balance 25000 80000 11000 85000 31500 71000 98500 C Payment of rent -4000 -4000 New Balance 21000 80000 11000 85000 31500 71000 94500 D Revenue from services 72000 72000 New Balance 21000 152000 11000 85000 31500 71000 166500 E Payment to creditors -20000 -20000 New Balance 1000 152000 11000 85000 11500 71000 166500 F Purchase lof supplies 8000 8000 New Balance 1000 152000 19000 85000 19500 71000 166500 G Cash receipts from customers 38000 38000 New Balance 39000 152000 19000 85000 19500 71000 204500 H Cash receipts from customers 77000 -77000 New Balance 116000 75000 19000 85000 19500 71000 204500 I Invoice for dry cleaning 29450 -29450 New Balance 116000 75000 19000 85000 48950 71000 175050 J Paid for Wage expense -24000 -24000 Truck expense -2100 -2100 Utiltities expense -1800 -1800 Miscellanous expense -1300 -1300 New Balance 86800 75000 19000 85000 48950 71000 145850 K Cost of supplies for the month -7200 -7200 New Balance 86800 75000 11800 85000 48950 71000 138650 L Payment of Dividends -5000 -5000 New Balance 81800 75000 11800 85000 48950 71000 133650 Requirement 4 Statement of cash flows for November Cash flow from operating activities Net Income 40150 Add : Decrease in Accounts Receviable 5000 Less : Increase in supplies -800 Add : Increase in Accounts Payable 17450 A Cash flow from Operating activities 61800 Cash flow from Investing activities Purchase of land -35000 B Cash flow from Investing activities -35000 Cash flow from financing activites Payment od dividednds -5000 Additional capital inflows 21000 C Cash flow from Financing activities 16000 Net cash flows (A+B+C) 42800 Add : Beginning cash balance 39000 Ending cash balance 81800 Thank You