Reference no: EM131793043
Question - Background Story:
Colfax Dry Cleaners is owned and operated by Maria Acosta. 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 November 1, 2011 are as follows:
|
Cash:
|
$34,200
|
|
Accounts Receivable:
|
$40,000
|
|
Supplies:
|
$5,000
|
|
Land:
|
$50,000
|
|
Accounts Payable:
|
$16,400
|
|
Capital Stock:
|
$10,000
|
Business transactions during November are summarized as follows:
(a) Maria Acosta invested additional cash in the business with a deposit of $35,000 in exchange for capital stock.
(b) Purchased land for use as a parking lot, paying cash of $30,000.
(c) Paid rent for the month, $4,500.
(d) Charged customers for dry cleaning revenue on account, $18,250.
(e) Paid creditors for account, $9,000.
(f) Purchased supplies on account, $2,800.
(g) Received cash from cash customers for dry cleaning revenue, $31,750.
(h) Received cash from customers on account, $27,800.
(i) Received monthly invoice for dry cleaning expense for November (to be paid on December 10) $14,800.
(j) Paid the following: wages expense, $8,200; truck expense, $1,875; utilities expense, $1,575; miscellaneous expense, $850.
(k) Determined that the cost of supplies on hand was $3,550; therefore, the cost of supplies used during the month was $4,250.
(l) Paid dividends, $10,000.
To Do:
1. Determine the amount of retained earnings as of November 1, 2011.
2. State the assets, liabilities, and stockholders' equity as of November 1st. In tabular form below the equation, indicate the increases and decreases resulting from each transaction and the new balances after all the transactions have been entered.
3. Determine the amount of retained earnings as of November 30, 2011.