Question

Dakota Company experienced the following events during 2018: 1. Acquired $25,000 cash from the issue of common 2. Paid $10,000 cash to purchase land. 3. Borrowed $10,000 cash. 4. Provided services for $35,000 cash. 5. Paid $2,000 cash for utilities expense. 6. Pald $20,000 cash for other operating expenses. 7. Paid a $4,000 cash dividend to the stockholders. 8. Determined that the market value of the land purchased in Event 2 is now $15,000. Required a. The January 1, 2018, 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. b-1. Prepare an income statement for the 2018 accounting period. b-2. Prepare a statement of changes in equity for the 2018 accounting period. b-3. Prepare a year-end balance sheet for the 2018 accounting period. b-4. Prepare a statement of cash flows for the 2018 accounting period. c. Determine the percentage of assets that were provided by retained earnings. Can you determine the cash in retained earnings Complete this question by entering your answers in the tabs below. Reg A Reg B1 Req B2 Req B3 Req B4 Reqc The January 1, 2018, 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. Select "NA" if there is no effect on the "Account Titles for Retained Earnings".)

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 1/1/18 $ 5,000 $ 10,000 = $ 10,000 + $ 2,000 + $ 3,000 $ 25,000 + $ 25,000 + $(10,000) $ 10,000 NA $ 10,000 10,000 NA $ 35,000 35,000 Service Revenue $ (2,000) (2,000) Utilties Expense $(20,000) (20,000) Other Operating Expense $ (4,000) (4,000) Dividends NA Totals $ 39,000 $20,000 = $ 20,000 + $ 27,000 + $ 12,000 + + + is + + + + is is as + 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 35,000 (2,000) (20,000) 13,000 Statement of Stockholders Equity For the Year Ended Dec 31, Year 2 Beginning common stock Issue of common stock Ending common stock 2,000 25,000 27,000 Beginning retained earnings Net Income Less Dividends Ending retained earnings Total Stockholders Equity 3,000 13,000 (4,000) 12,000 39,000

Dakota Company Balance Sheet As of Dec 31 Assets Cash Land Total Assets 39,000 20,000 59,000 Liabilities & Stockholders Equity Liabilities Notes Payable Total Liabilties 20,000 20,000 Stockholders Equity Common Stock Retained earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 27,000 12,000 39,000 59,000 C-1 Percentage of Assets provided by RE Retained Earnings/Total Assets =12,000/ 59,000 Percentage of Assets provided by RE 20.3% C-2 Can you determine cash in RE? No

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 35,000 (2,000) (20,000) 13,000 Cash flows from Investing Activities Cash paid to purchase land Net Cash Flow from Investing Activities (10,000) (10,000) 25,000 10,000 (4,000) 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 31,000 34,000 5,000 39,000