Bevs Dry Cleaners Owned By Beverly Zahn

Bevs Dry Cleaners Is Owned And Operated By Beverly Zahn A Building A

Bevs Dry Cleaners is owned and operated by Beverly Zahn. The assets and liabilities of the business on November 1, 2016, are as follows: Cash, $39,000; Accounts Receivable, $80,000; Supplies, $11,000; Land, $50,000; Accounts Payable, $31,500. Beverly Zahn invested additional cash in the business, purchased land, paid rent, charged and received revenue, paid creditors, purchased supplies, paid wages, truck expenses, utilities, miscellaneous expenses, and withdrew funds for personal use. The costs of supplies on hand and supplies used during the month are also provided. The task is to determine the amount of Beverly Zahn's capital as of November 1.

Paper For Above instruction

The calculation of Beverly Zahn's capital as of November 1, 2016, requires understanding her initial investment in the business, which can be deduced by adjusting the business's assets and liabilities for the transactions that occurred during November. In the context of accounting, the capital account signifies the owner’s equity in the business and is fundamentally calculated as the residual interest after deducting total liabilities from total assets. The initial capital can be established by backward calculation using the ending balances and transactions within the period, especially since the question specifically asks for her capital as of November 1, 2016.

Initially, the assets and liabilities as of November 1, 2016, are a starting point. These are given as assets: Cash ($39,000), Accounts Receivable ($80,000), Supplies ($11,000), Land ($50,000); and liabilities: Accounts Payable ($31,500). The net equity, or initial capital, is the difference between total assets and total liabilities on November 1, 2016. Therefore, the initial capital can be calculated as:

Initial Capital = Total Assets — Total Liabilities

where Total Assets = Cash + Accounts Receivable + Supplies + Land = $39,000 + $80,000 + $11,000 + $50,000 = $180,000.

and Total Liabilities = Accounts Payable = $31,500.

Thus, initial capital as of November 1, 2016, is:

Initial Capital = $180,000 - $31,500 = $148,500.

Next, we examine the transactions during November to account for changes. Beverly Zahn invested an additional $21,000 cash, which increases the owner’s equity, and the purchase of land for $35,000, paid in cash, reduces cash but increases land assets, leaving total assets unchanged in the land account. Payment of rent ($4,000) and other expenses reduce cash and potentially decrease owner's equity, but as these are expenses, they simply reduce net income, which in turn decreases retained earnings, and consequently, the capital account. Revenue from sales increases assets via accounts receivable and cash, increasing total assets and, accordingly, owner’s equity.

The specific events, such as revenue collection, are essential for understanding changes in assets and cash flow, but the main calculation of initial capital remains consistent, as subsequent transactions during November are actions on top of the starting point on November 1. The withdrawal of $5,000 for personal use decreases owner’s equity. To determine the capital as of November 1, it's primarily the initial capital that is relevant, assuming no other owner investments or withdrawals occurred before November 1.

Therefore, the amount of Beverly Zahn's capital as of November 1, 2016, is deduced to be $148,500, based on the initial asset and liability balances. The activities during November impact her capital account, but they are considered adjustments starting from the November 1 baseline. Since the question specifically asks for her capital as of November 1, and no prior transactions are indicated, the initial capital on that date would be $148,500.

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