Kean Dry Cleaners is owned and operated by Wally Lowman. A building and equipmen
ID: 2419128 • Letter: K
Question
Kean Dry Cleaners is owned and operated by Wally Lowman. 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 capital stock of the business on July 1, 2014, are as follows: Cash, $18,480; Accounts Receivable, $47,840; Supplies, $3,520; Land, $44,000; Accounts payable, $15,840; Capital Stock, $10,000. Business transactions during July are summarized as follows: Wally Lowman invested additional cash in exchange for capital stock with a deposit of $36,000 in the business bank account. Paid $18,000 for the purchase of land adjacent to land currently owned by Kean Dry Cleaners as a future building site. Received cash from cash customers for dry cleaning revenue, $22,000. Paid rent for the month, $6,600. Purchased supplies on account, $3,080. Paid creditors on account, $16,280. Charged customers for dry cleaning revenue on account, $44,000. Received monthly invoice for dry cleaning expense for July (to be paid on August 10), $17,600. Paid the following: wages expense, $9,680; truck expense, $3,520; utilities expense, $3,740; miscellaneous expense, $1,670. Received cash from customers on account, $35,200. Determined that the cost of supplies on hand was $2,420; therefore, the cost of supplies used during the month was $4,180. Paid dividends, $10,100. Required: 1. Determine the amount of retained earnings as of July 1 of the current year. $ 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 stockholders' equity as of July 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 July, a retained earnings statement for July, and a balance sheet as of July 31.
Explanation / Answer
Answer 1.
Balance sheet as on July 1
Answer 2.
RetainedEarnings
Dividend paid (assumed as expense)
Answer 3.
Income statement
So retained earnings on 31 july are:
As on 1 july $88000
Add: Profit of july month $8910
Balance as on 31 july $96910
Balance sheet s on 31 july
Liabilities and capital Amount Assets Amount Accounts payable 15840 cash 18480 Capital 10000 Accounts receivable 47840 retained earning B/f 88000 Supplies 3520 Land 44000 Total 113840 Total 113840Related Questions
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