D’Lite Dry Cleaners is owned and operated by Joel Palk. A building and equipment
ID: 2609093 • Letter: D
Question
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, $45,000; Accounts Receivable, $93,000; Supplies, $7,000; Land, $75,000; Accounts Payable, $40,000; Common Stock, $60,000. Business transactionsduring July are summarized as follows:
A. Joel Palk invested additional cash in exchange for common stock with a deposit of $35,000 in the business bank account. B. Paid $50,000 for the purchase of land adjacent to land currently owned by D’Lite Dry Cleaners as a future building site. C. Received cash from cash customers for dry cleaning revenue, $32,125. D. Paid rent for the month, $6,000. E. Purchased supplies on account, $2,500. F. Paid creditors on account, $22,800. G. Charged customers for dry cleaning revenue on account, $84,750. H. Received monthly invoice for dry cleaning expense for July (to be paid on August 10), $29,500. I. Paid the following: wages expense, $7,500; truck expense, $2,500; utilities expense, $1,300; miscellaneous expense, $2,700. J. Received cash from customers on account, $88,000. K. Determined that the cost of supplies on hand was $5,900; therefore, the cost of supplies used during the month was $3,600. L. Paid dividends, $12,000.Explanation / Answer
1)
Retained Earning = Assets - Liabilities
Assets as at 1 July 2014 = Cash + Accounts Receivable + Land + Supplies
= 45000+93000+75000+7000
= 220,000
Liabilities as at 1 July 2014 = Capital Stock + accounts Payable
= 60,000 + 40,000
= 100, 000
Therefore retained earnings as at 1 july 2014 = 220,000 - 100,000
= $ 120,000
2)
Total Assets= 220,000.00
Account Payble= 40000.00
Owner's Equity= Total Assets- Total Liabilities
Owner Equity= 220000-40000= 180000 USD
3.
4,
Balance Sheet as at 1 july 2014 Liabilities Amount Assets Amount Owner's Equity $180,000.00 Cash $45,000.00 Account Receivables $93,000.00 Supplies Stock $7,000.00 Account Payble $40,000.00 Land $75,000.00 $220,000.00 $220,000.00Related Questions
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