Laundromat Laundry’s Small Business Accounting


Laura’s Laundromat is a registered laundry business that is located at Czech Road, Yukon Oklahoma. The business has been in operation for the last 3 years. Due to its location, the business is able to serve its target market that includes low-income tenants and busy career home owners due to the fact that it is set in an area with a large number of apartments. In beginning, the only other laundry business in the area was located about 3.5 miles from Laura’s Laundromats.

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The place has become popular with young adults because of its smart card system that allows its customers’ to have their laundry done with no need to carry loose change around. Their Speed Queen equipment is not only efficient but also environmentally friendly. Laura’s Laundromat also provides other services such as soda and candy vending using a machine that is efficient. The young professionals also find the place relaxing because as they wait for their laundry to be done they can exercise on the treadmill while watching their favorite sports channel on 40″ flat panel TV.

Their children are not left out as there is a secure and clean play center, complete with a 32″ flat-panel TV and a DVD player. The place has grown from a laundry place to a sort of a relaxation center. The business is owned by Laura Ridley, a well knows home maker in the area. This business report is written to review their starting business plan, examine its current operational problems, and determine ways through which improvements can be achieved in order to increase profitability (Bratton 134).

Problem identification

It has been observed that for about one year, Laura’s Laundromat has continuously experienced “appreciating inventory costs, declining profitability and declining customer service quality” (Carruthers and Wendy 416). These problems led to a team being set up to evaluate how the challenges can be solved and return the company to profitability. The areas that were investigated include technology change, quality of products, communication among the employees, customer satisfaction among other areas.

Preliminary results showed that the company did not adapt quickly to technology changes. They also pointed towards poor service and diversion from the market growth plan provided by the business plan. The low sales were attributed to a reduction of its market share due to a recent rise in the number of laundry businesses in the area.

This report aims to suggest a way in which the current means of doing business can be overhauled so that the business can be returned to the profitability path (Dubrin 80).


In writing this report, some principle accounting assumptions are used: the running of Laura’s Laundromat’s is viewed to be a distinct and separate entity from not only its real owners but also any other business ventures in their possession(the accounting entity assumption). This means that the accounting entries of the owner and Laura’s Laundromat’s as a business are not taken as one. This principle assumption is valued because it separates the personal financial problems of owners and from those that are unique to the business. All accounting entries including the profit and loss financial accounts only show revenues and expenses incurred by the business. Revenues from the owners are taken to be a capital injection into the business while expenses are taken to be liabilities (Fried 57).

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Since the business is located in Yukon, Oklahoma. All the transactions are assumed to be in the US dollar. This assumption allows the business assets, capital, and liabilities to be evaluated in terms of the dollar. Thus the dollar is the unit of measurement. Laura’s Laundromat’s is in the service industry thus some of the contributions made by the employees cannot be quantified monetarily. These include customer satisfaction, good employee relations, the effect of entertainment on customers, etc. These are thus left out of the analysis.

It is also assumed that Laura’s Laundromat is a continuing business and will do so for an indefinite time. Laura’s Laundromat has no intention to liquidate now or in the future, thus this analysis report shows the projection for the finite future.

The balance sheet clearly shows the difference between fixed assets, current assets, short term, and long term liabilities, also the capital and revenue expenditure. The balance sheet differentiates between incomes and expenditures for the financial year gone and those to occur in the coming year (Carruthers and Wendy 420).


The management of the company commissioned a study to evaluate its current share of the market and how it can be grown in the future. This comprehensive assessment included a technology review and also an impact analysis of the effect of new competitors. These reviews were aimed to increase the company’s profitability (Fried 57). Another major problem that was noted was the conduct of employees. As a result of these findings, a strategy was devised to ensure that the employees of Laundromat are properly trained on interpersonal relationships and how to deal with clients. These were to be rooted in the organizational culture of Laundromats.

Anticipated Challenges and Solutions

The main problem facing the business is the rising cost of soap and detergents that are vital for the business over the last few years. The cost of labor and electricity has also been on the rise. This rise in the cost of soaps and detergent can be traced to the manufacturer who claimed that the cost of importing production material such as chemicals had gone up due to a weak dollar. The weak dollar and the rise in the rate of inflation made the employees demand more salary. Another problem that is projected to come up is the training of the workers, especially on organizational behavior. Thus the company was to come up with strategies on how it was going to appraise the employees to identify areas where improvement is to be stressed.

Balance Sheet

Laundromat’s Balance Sheet
For the year _2011
Assets Liabilities
Cash $14,300 Accounts Payable
Accounts Receivable 2,000 Equity $1000
Supplies 600 Business Plan, Capital 37,900
Land 7,000 Other
Building 15,000 Total Liabilities
Total Assets 38,900 Owner’s Equity 38,900

Source: Fried, Gunther. “Relevance Added: Combining ABC with German Cost Accounting”. Strategic Finance 23 (2005): 56–61.

Best Management Practices

The company will seek to increase productivity through the adoption of the following best management practices. The company will ensure that it builds a reliable workforce that can deliver. This will be achieved by boosting the employees’ morale through activities such as production recognition awards (Dubrin 20). This will ensure that the performance of the workers is consistent with the desired standards. Specific activities to be carried out include coaching, training, and the provision of more resources (Bratton 67). Laundromat will ensure that its clients are treated to quality efficient services that will make them come back.

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All the written guidelines will be followed to ensure that all activities are planned and carried out in compliance with the requirements of best management practices(Dubrin 25). The company’s activities will also be carried out as required by various legislation, regulatory framework, and policies that apply to such businesses(Bratton 67).

Works Cited

Bratton, William. Enron and the Dark Side of Shareholder Value.New Orleans: Tulane Law Review, 2002.

Carruthers, Bruce and Wendy, Nelson. “Accounting for Rationality: Double-Entry Bookkeeping and the Rhetoric of Economic Rationality”. American Journal of Sociology, 97(2006) 412-420.

DuBrin, Young. Fundamentals of organizational behaviour. Toronto: Thomson Nelson. 2007.

Fried, Gunther. “Relevance Added: Combining ABC with German Cost Accounting”. Strategic Finance 23(2005): 56–61.

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