Question

please help me to find the correct answer

Dakota Company experienced the following events during Year 2.

1. Acquired $30,000 cash from the issue of common stock.
2. Paid $10,000 cash to purchase land.
3. Borrowed $10,000 cash.
4. Provided services for $50,000 cash.
5. Paid $1,500 cash for utilities expense.
6. Paid $35,000 cash for other operating expenses.
7. Paid a $10,000 cash dividend to the stockholders.
8. Determined that the market value of the land purchased in Event 2 is now $12,500.

Required
a. The January 1, Year 2, general ledger account balances are shown in the following accounting equation. Record the eight events in the appropriate general ledger accounts. Record the amounts of revenue, expense, and dividends in the Retained Earnings column. Provide the appropriate titles for these accounts in the last column of the table. The first event is shown as an example. (Enter any decreases to account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave cells blank if there is no corresponding Retained Earnings input needed.)

Answer is complete but not entirely correct. Assets Event Account Titles for Retained Earnings Cash + DAKOTA COMPANY Accounting Equation for Year 2 Liabilities + Stockholders' Equity Notes Common + Retained Payable Earnings = 17,000 + 13,000 30,000 Land + + Balance 1/1/Year 2 Stock 10,000 + 25,000 + + 10,000 + 10,000 + 15,000 30,000 (10,000) 10,000 50,000 (1,500) (35,000) (10,000) + + + + 50,000 Service revenue 1,500 X Utilities expense 35,000 Operating expense 10,000 Dividends + + + + Totals 48,500 + 35.000 + 40.000 109.500 +

Answer 1

NA + Dakota Company Balance Sheet Assets Liabilties Stockholders Equity Events Cash Land = Notes Payable + Common Stock + Retained Earnings Account title for Retained Earnings Bal 1/1/Year 2 $ 15,000 $ 25,000 = $ 17,000 + $ 10,000 + $ 13,000 $ 30,000 + $ 30,000 + $(10,000) $ 10,000 NA $ 10,000 10,000 + NA $ 50,000 50,000 Service Revenue $ (1,500) (1,500) Utilties Expense $(35,000) (35,000) Other Operating Expense $(10,000) (10,000) Dividends NA Totals $ 48,500 $ 35,000 = $ 27,000 + $ 40,000 + $ 16,500 + + + + + + + + + Note Under US GAAP, fixed assets cannot be revalued upwards, so no entry for last event 8

Dakota Company Income Statement For the Year Ended Dec 31, Year 2 Service Revenue Utilties Expense Other Operating Expense Net Income 50,000 (1,500) (35,000) 13,500 Statement of Stockholders Equity For the Year Ended Dec 31, Year 2 Beginning common stock Issue of common stock Ending common stock 10,000 30,000 40,000 Beginning retained earnings Net Income Less Dividends Ending retained earnings Total Stockholders Equity 13,000 13,500 (10,000) 16,500 56,500

Dakota Company Balance Sheet As of Dec 31 Assets Cash Land Total Assets 48,500 35,000 83,500 Liabilities & Stockholders Equity Liabilities Notes Payable Total Liabilties 27,000 27,000 Stockholders Equity Common Stock Retained earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 40,000 16,500 56,500 83,500 C-1 Percentage of Assets provided by RE Retained Earnings/Total Assets =16,500/ 83,500 Percentage of Assets provided by RE 1 9.8% c-2 Does RE balance reflect cash that company has available to pay dividends? NO d Based on Dec 31, Year 2 Bal Sheet, largest cash dividend Dakota could pay? Cash Dividend Net Income less Dividends paid =13,500-10,000 Cash Dividend 3,500 Note The company can pay dividends out of its net income Since out of net income 13,500 dividends of 10,000 are already paid 3,500 is available for dividends

Dakota Company Cashflow Statement Cash flows from Operating Activities Cash received for services provided Cash paid for utilties Cash paid for other operating expenses Net Cash Flow from Operating Activities 50,000 (1,500) (35,000) 13,500 Cash flows from Investing Activities Cash paid to purchase land Net Cash Flow from Investing Activities (10,000) (10,000) 30,000 10,000 (10,000) Cash flows from Financing Activities Cash receipts from stock issue Cash receipts from loan Cash payments for dividends Net Cash Flow from Financing Activities Net Increase in Cash Beginning Cash Balance Ending Cash Balance 30,000 33,500 15,000 48,500