Question

Che 1. Acquired $30,000 cash from the issue of common stock 2. Paid $12,000 cash to purchase land. 3. Borrowed $10,000 cash 4. Provided services for $20,000 cash. 5. Paid $1,000 cash for utilities expense. 6. Paid $15,000 cash for other operating expenses. 7. Paid a $2,000 cash dividend to the stockholders. 8. Determined that the market value of the land purchased in Event 2 is now $12,700. 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, b-1. Prepare an income statement for the Year 2 accounting period, b-2. Prepare a statement of changes in equity for the Year 2 accounting period b-3. Prepare a year-end balance sheet for the Year 2 accounting period b-4. Prepare a statement of cash flows for the Year 2 accounting period, c-1. Determine the percentage of assets that were provided by retained earnings. c-2. Can you determine the cash in retained earnings?

Answer 1

A Event No. Asset + + + + + DAKOTA COMPANY Accoutning Equation for Year 2 = Liabilities + Stockholders' Equity Notes Common Retained Land Payable Stock + Earnings Account Info $12,000 $ 6,000 + $ 8,000 30,000 12,000 = 10,000 + 20,000 Service Revenue (1,000) Utilities Expense (15,000) Operating Expense (2,000) Dividends + + + + + + Il Cash 1/1/Year 2 $2,000 1 30,000 2 (12,000) 3 10,000 4 20,000 5 (1,000) 6 (15,000 7 (2,000) 8 Total 32,000 + + + + + + + + II + + + + + + II + + + 24,000 = 10,000 + 36,000+ 10,000 Assets $56,000 liabilites $ 10,000 Stockholders' Equity $ 46,000 Liabilities and SHE $56,000

B2 B3 B1 DAKOTA COMPANY Income Statements For the Year Ended Dec 31, Year 2 DAKOTA COMPANY Statement of Stockholders Equity For the Year Ended Dec 31, Year 2 DAKOTA COMPANY Balance sheet As of Dec 31, Year 2 $ 6,000 $ 30,000 Service Revenue Utilities Expense Operating Expense Net Income $ 20,000 (1,000) (15,000) $ 4,000 $ 32,000 $ 24,000 $ 36,000 $ 8,000 $ 56,000 Beginning Common Stock Add: Common Stock Issued Ending Common Stock Beginning Retained Earnings: Add: Net Income Less: Dividends Ending Retained Earnings Total Stockholders' Equity $ 4,000 (2,000) $ 10,000 Assets: Cash Land Total Assets Liabilities Notes Payable Total Liabilities Stockholders' Equity Common Stock Retained Earnings Total Stockholders' equity Total Liabilities and Stockholders' Equity $ 10,000 $46,000 $10,000 $ 36,000 $ 10,000 $ 46,000 $ 56,000

B4 C1 $ 17.9% DAKOTA COMPANY Statement of Cash Flow For the Year Ended Dec 31, Year 2 Retained Earnings Total Assets 10,000 56,000 $ $ 20,000 (1,000 (15,000) C2 No, Cash cannot directly tracable in retained earnings. *Cash is an asset, *Retained Earnings consisits of net income earned after dividends paid. $ 4,000 $-12,000 $-12,000 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers Cash payments for utilities expense Cash payments for other operating expense Net cash provided by Operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Land Net cash provided by Investing activities CASH FLOWS FROM FINANCING ACTIVITIES Common stock issued Receipt of loan Payment of dividends Net cash provided by Financing activities Net increase in cash and cash equivalents Add: Beginning Cash Balance Ending Cash Balances $ 30,000 $ 10,000 (2,000) $ 38,000 $30,000 $ 2,000 $ 32,000

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