Ex.

1–13

a. (1) Provided catering services for cash, $35,000.

(2) Purchase of land for cash, $15,000.
(3) Payment of expenses, $26,000.
(4) Purchase of supplies on account, $1,500.
(5) Withdrawal of cash by owner, $2,000.
(6) Payment of cash to creditors, $7,200.
(7) Recognition of cost of supplies used, $3,000.

b. $15,200 ($30,000 – $14,800)

c. $4,000 (–$2,000 + $35,000 – $29,000)
d. $6,000 ($35,000 – $29,000)
e. $4,000 ($6,000 – $2,000)

Prob. 1–3A

1.
OMH COMPUTER SERVICES
Income Statement
For the Month Ended July 31, 2010
Fees earned.......................................................................... $ 50,250
Expenses:
Salaries expense.......................................................... $ 12,000
Rent expense................................................................ 8,000
Auto expense................................................................ 3,875
Supplies expense......................................................... 1,525
Miscellaneous expense............................................... 1,875
Total expenses.......................................................... 27,275
Net income........................................................................... $ 22,975

2.
OMH COMPUTER SERVICES
Statement of Owner’s Equity
For the Month Ended July 31, 2010
Doug Van Buren, capital, July 1, 2010.............................. $ 0
Investment on July 1, 2010................................................. $30,000
Net income for July............................................................. 22,975
$52,975
Less withdrawals................................................................. 7,500
Increase in owner’s equity................................................. 45,475
Doug Van Buren, capital, July 31, 2010............................ $45,475

3.
OMH COMPUTER SERVICES
Balance Sheet
July 31, 2010
Assets Liabilities
Cash.................................. $ 25,000 Accounts payable........... $ 1,350
Accounts receivable........ 20,750
Supplies............................ 1,075 Owner’s Equity
Doug Van Buren, capital 45,475
Total liabilities and
Total assets...................... $ 46,825 owner’s equity............ $ 46,825

4. (Optional)
OMH COMPUTER SERVICES
Statement of Cash Flows
For the Month Ended July 31, 2010
Cash flows from operating activities:
Cash received from customers................................... $ 29,500
Deduct cash payments for expenses
and payments to creditors....................................... 27,000*
Net cash flow from operating activities..................... $ 2,500
Cash flows from investing activities:................................ 0
Cash flows from financing activities:
Cash received as owner’s investment....................... $ 30,000
Deduct cash withdrawal by owner............................. 7,500
Net cash flow from financing activities..................... 22,500
Net cash flow and July 31, 2010, cash balance................ $ 25,000
*$8,000 + $1,250 + $5,750 + $12,000

Prob. 1–5A

1.
Assets = Liabilities + Owner’s Equity

Accounts Accounts
Cash + Receivable + Supplies + Land = Payable + Maria Acosta, Capital
34,200 + 40,000 + 5,000
+ 50,000 = 16,400 + Maria Acosta, Capital
129,200 = 16,400 + Maria Acosta, Capital
 112,800 = Maria Acosta, Capital
2.
Owner’s
Assets = Liabilities + Equity

Maria Maria
Accounts Accounts Acosta, Acosta,
Cash + Receivable + Supplies + Land = Payable + Capital – Drawing

Bal. 34,200 40,000 5,000 50,000 16,400 112,800

a. + 35,000 + 35,000
Bal. 69,200 40,000 5,000 50,000 16,400 147,800
b. – 30,000 + 30,000
Bal. 39,200 40,000 5,000 80,000 16,400 147,800
c. – 4,500
Bal. 34,700 40,000 5,000 80,000 16,400 147,800
d. + 18,250
Bal. 34,700 58,250 5,000 80,000 16,400 147,800
e. – 9,000 – 9,000
Bal. 25,700 58,250 5,000 80,000 7,400 147,800
f. + 2,800 + 2,800
Bal. 25,700 58,250 7,800 80,000 10,200 147,800
g. + 31,750
Bal. 57,450 58,250 7,800 80,000 10,200 147,800
h. + 27,800 – 27,800
Bal. 85,250 30,450 7,800 80,000 10,200 147,800
i. + 14,800
Bal. 85,250 30,450 7,800 80,000 25,000 147,800
j. – 12,500
Bal. 72,750 30,450 7,800 80,000 25,000 147,800
k. – 4,250
Bal. 72,750 30,450 3,550 80,000 25,000 147,800
l. – 10,000 – 10,000
Bal. 62,750 30,450 3,550 80,000 25,000 147,800 – 10,000

3.
COLFAX DRY CLEANERS
Income Statement
For the Month Ended November 30, 2010
Dry cleaning revenue.......................................................... $50,000
Expenses:
Dry cleaning expense.................................................. $ 14,800
Wages expense............................................................ 8,200
Rent expense................................................................ 4,500
Supplies expense......................................................... 4,250
 Truck expense.............................................................. 1,875
Utilities expense........................................................... 1,575
Miscellaneous expense............................................... 850
Total expenses.......................................................... 36,050
Net income........................................................................... $ 13,950

COLFAX DRY CLEANERS

Statement of Owner’s Equity
For the Month Ended November 30, 2010
Maria Acosta, capital, November 1, 2010....... $ 112,800
Additional investment by Maria Acosta......... $35,000
Net income for November................................ 13,950
$ 48,950
Less withdrawals.............................................. 10,000
Increase in owner’s equity.............................. 38,950
Maria Acosta, capital, November 30, 2010..... $151,750

COLFAX DRY CLEANERS

Balance Sheet
November 30, 2010
Assets Liabilities
Cash.................................. $ 62,750 Accounts payable........... $ 25,000
Accounts receivable........ 30,450
Supplies............................ 3,550 Owner’s Equity
Land.................................. 80,000 Maria Acosta, capital...... 151,750
Total liabilities and
Total assets $176,750 owner’s equity $176,750

4. (Optional)
COLFAX DRY CLEANERS
Statement of Cash Flows
For the Month Ended November 30, 2010
Cash flows from operating activities:
Cash received from customers................................... $ 59,550*
Deduct cash payments for expenses
and payments to creditors....................................... 26,000**
Net cash flow from operating activities..................... $ 33,550
Cash flows from investing activities:
Purchase of land.......................................................... (30,000)
Cash flows from financing activities:
 Cash received as owner’s investment....................... $ 35,000
Deduct cash withdrawal by owner............................. 10,000
Net cash flow from financing activities..................... 25,000
Increase in cash................................................................... $ 28,550
Cash balance, November 1, 2010....................................... 34,200
Cash balance, November 30, 2010..................................... $ 62,750
*$31,750 + $27,800
**$4,500 + $9,000 + $12,500

Prob. 1–5B

1.
Assets = Liabilities + Owner’s Equity

Accounts Accounts
Cash + Receivable + Supplies + Land = Payable + Peyton Keyes, Capital
17,000 + 31,000 + 3,200 + 36,000 = 10,400 + Peyton Keyes, Capital
87,200 = 10,400 + Peyton Keyes, Capital
76,800 = Peyton Keyes, Capital

2.
Owner’s
Assets = Liabilities + Equity

Peyton Peyton
Accounts Accounts Keyes, Keyes,
Cash + Receivable + Supplies + Land = Payable + Capital – Drawing

Bal. 17,000 31,000 3,200 36,000 10,400 76,800

a. + 25,000 + 25,000
Bal. 42,000 31,000 3,200 36,000 10,400 101,800
b. – 24,000 + 24,000
Bal. 18,000 31,000 3,200 60,000 10,400 101,800
c. + 19,500
Bal. 37,500 31,000 3,200 60,000 10,400 101,800
d. – 3,000
Bal. 34,500 31,000 3,200 60,000 10,400 101,800
e. + 1,550 + 1,550
Bal. 34,500 31,000 4,750 60,000 11,950 101,800
f. – 5,100 – 5,100
Bal. 29,400 31,000 4,750 60,000 6,850 101,800
g. + 24,750
Bal. 29,400 55,750 4,750 60,000 6,850 101,800
h. + 8,200
Bal. 29,400 55,750 4,750 60,000 15,050 101,800
i. – 8,050
Bal. 21,350 55,750 4,750 60,000 15,050 101,800
j. + 26,750 – 26,750
Bal. 48,100 29,000 4,750 60,000 15,050 101,800
k. – 2,950
Bal. 48,100 29,000 1,800 60,000 15,050 101,800
l. – 18,000 – 18,000
Bal. 30,100 29,000 1,800 60,000 15,050 101,800 – 18,000

Owner’s Equity (Continued)

Dry Dry
Cleaning Cleaning Wages Rent Supplies Truck Utilities Misc.
+ Revenue – Exp. – Exp. – Exp. – Exp. – Exp. – Exp. – Exp.

Bal.
a.
Bal.
b.
Bal.
c. + 19,500
Bal. 19,500
d. – 3,000
Bal. 19,500 – 3,000
e.
Bal. 19,500 – 3,000
f.
Bal. 19,500 – 3,000
g. + 24,750
Bal. 44,250 – 3,000
h. – 8,200
Bal. 44,250 – 8,200 – 3,000
i. – 5,100 – 1,200 – 800 – 950
Bal. 44,250 – 8,200 – 5,100 – 3,000 – 1,200 – 800 – 950
j.
Bal. 44,250 – 8,200 – 5,100 – 3,000 – 1,200 – 800 – 950
k. – 2,950
Bal. 44,250 – 8,200 – 5,100 – 3,000 – 2,950 – 1,200 – 800 – 950
l.
Bal. 44,250 – 8,200 – 5,100 – 3,000 – 2,950 – 1,200 – 800 – 950
3.
SWAN DRY CLEANERS
Income Statement
For the Month Ended July 31, 2010
Dry cleaning revenue.......................................................... $ 44,250
Expenses:
Dry cleaning expense.................................................. $8,200
Wages expense............................................................ 5,100
Rent expense................................................................ 3,000
Supplies expense......................................................... 2,950
Truck expense.............................................................. 1,200
Utilities expense........................................................... 800
Miscellaneous expense............................................... 950
Total expenses.......................................................... 22,200
Net income........................................................................... $ 22,050

SWAN DRY CLEANERS

Statement of Owner’s Equity
For the Month Ended July 31, 2010
Peyton Keyes, capital, July 1, 2010................ $ 76,800
Additional investment by Peyton Keyes........ $ 25,000
Net income for July.......................................... 22,050
$ 47,050
Less withdrawals.............................................. 18,000
Increase in owner’s equity.............................. 29,050
Peyton Keyes, capital, July 31, 2010.............. $ 105,850

SWAN DRY CLEANERS

Balance Sheet
July 31, 2010
Assets Liabilities
Cash.................................. $ 30,100 Accounts payable........... $ 15,050
Accounts receivable........ 29,000
Supplies............................ 1,800 Owner’s Equity
Land.................................. 60,000 Peyton Keyes, capital.... 105,850
Total liabilities and
Total assets...................... $120,900 owner’s equity............ $120,900
4. (Optional)
SWAN DRY CLEANERS
Statement of Cash Flows
For the Month Ended July 31, 2010
Cash flows from operating activities:
Cash received from customers................................... $46,250*
Deduct cash payments for expenses
and payments to creditors....................................... 16,150**
Net cash flow from operating activities..................... $ 30,100
Cash flows from investing activities:
Purchase of land.......................................................... (24,000)
Cash flows from financing activities:
Cash received as owner’s investment....................... $25,000
Deduct cash withdrawal by owner............................. 18,000
Net cash flow from financing activities..................... 7,000
Increase in cash................................................................... $ 13,100
Cash balance, July 1, 2010................................................. 17,000
Cash balance, July 31, 2010............................................... $ 30,100
*$19,500 + $26,750
**$3,000 + $5,100 + $8,050