Part A
Assets |
Liabilities |
Stockholders’ equity |
||||||||
Cash |
+ |
Land |
= |
Notes payable |
+ |
Common stock |
+ |
Retained earnings |
Acct.Title/RE |
|
Beg. Bal. |
40000 |
90000 |
50000 |
55000 |
25000 |
|||||
Event no. 1 |
68000 |
NA |
NA |
68000 |
NA |
NA |
||||
2 |
100000 |
NA |
NA |
NA |
100000 |
Revenue |
||||
3 |
(57000) |
NA |
NA |
NA |
(57000) |
Expenses |
||||
4 |
(14000) |
NA |
NA |
NA |
(14000) |
Dividend |
||||
5 |
(50000) |
50000 |
NA |
NA |
NA |
NA |
||||
6 |
(10000) |
NA |
(10000) |
NA |
NA |
NA |
||||
Totals |
77000 |
140000 |
40000 |
123000 |
54000 |
Beginning common stock = total common stock – common stock issued = 123000-68000 = 55000
Beginning notes payable = total notes payable + note payable paid = 40000+10000 = 50000
Beginning balance of cash = notes payable + common stock + retained earnings – land = 50000+55000+25000-90000 = 40000
Issue of common stock will increase cash balance = 68000
Revenue = total cash – beginning balance – issue of common stock + expenses + dividends + purchase of and + payment of notes payable = 77000-40000-68000+57000+14000+50000+10000 = 100000
Payment of dividends will decrease the retained earnings
Purchase of land will increase land balance
Payment of notes payable will decrease the balance of notes payable
Part B
Yes.
There is sufficient cash available to repay debt on January 1, 2018
Cash balance is $77000 against the liabilities of $40000
Part C
Maximum cash dividend = $54000
Maximum cash dividend is equal to the balance of retained earnings.
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