Question

Dakota Company experienced the following events during Year 2. 1. Acquired $10,000 cash from the issue of common stock 2. Paid $25,000 cash to purchase land. 3. Borrowed $7,500 cash. 4. Provided services for $37,500 cash. 5. Paid $1,500 cash for utilities expense. 6. Paid $22,500 cash for other operating expenses. 7. Paid a $2,500 cash dividend to the stockholders. 8. Determined that the market value of the land purchased in Event 2 is now $30,000. 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.) Assets Event DAKOTA COMPANY Accounting Equation for Year 2 Liabilities Stockholders' Equity Notes Common Retained Land Payable Stock Earnings 25,000 = 18,000 + 10,000 + 19,000 + 10,000+ Cash Account Titles for Retained Earnings + + Balance 1/1/Year 2 1 2 3. 22,000+ 10,000+ (10,000) 5,000+ 38+ + 4 5 + 6 7 8 Totals 27.038 - 25.000 - 18.000 + 20.000 19,000

Answer 1

Requirement (A) Event + = + + Dakota Company Accounting Equation for Year 2 Assets Liabilities + Stockholders Equity Account Titles for Cash + Land Notes Payable + Common Stock + Retained Earnings Retained Earnings $ 22,000 + $ 25,000 = $ 18,000 + $ 10,000 + $ 19,000 $ 10,000+ $ 10,000+ NA $(25,000) + $ 25,000 NA $ 7,500 + = $ 7,500 + NA $ 37,500 + $ 37,500 Service Revenue $ (1,500) + $ (1,500) Utilities Expense $(22,500) + + $ (22,500) Operating Expense $ (2,500) + + $ (2,500) Dividends NA $ 25,500 + $ 50,000 $ 25,500 + $ 20,000 + $ 30,000 + = + Beginning 1 2 3 4 5 6 7 8 Totals + = + + + = + + = Requirement (B1) Dakota Company Income Statement For the Year Ended December 31, Year 2 Service Revenue $ 37,500 Utilities Expense $ (1,500) Operating Expense $ (22,500) Net Income $ 13,500

Requirement (B2) Dakota Company Statement of changes in stockholders Equity For the Year Ended December 31, Year 2 Beginning Common Stock $ 10,000 Add : Common stock issued $ 10,000 Ending Common stock Beginning Retained Earnings $ 19,000 Add : Net Income $ 13,500 Less : Dividends $ (2,500) Ending Retained Earnings Total Stockholders Equity Requirement (B4) Dakota Company Statement of Cash flows For the Year Ended December 31, Year 2 Cash flow from operating activities Cash receipts from customers $ 37,500 Cash payment for utilities expense $ (1,500) Cash payments for other operating expense $(22,500) $ 20,000 $ 13,500 $ 30,000 $50,000 Net cash flow from operating activities Cash flow from investing activities Cash paid to purchase land $(25,000) $ (25,000) Net cash from investing activities Cash flow from financing activities Cash receipt from stock issuance Cash receipt from loan Cash payments for dividends Requirement (B3) $ 10,000 $ 7,500 $ (2,500) Dakota Company Balance Sheet As of December 31, Year2 Assets Cash Land Net cash flow from financing activities Net increase in cash Add : Beginning cash balance Ending cash balance $ $ $ $ 15,000 3,500 22,000 25,500 $ 25,500 $50,000 $ 75,500 Total assets Liabilities Notes Payable $ 25,500 Requirement (C1) Percentage of assets 30000/75500 39.74% $ 25,500 Total Liabilities Stockholders Equity Common Stock Retained Earnings Requirement (C2) No $ 20,000 $ 30,000 Cash cannot be directly traced to retained earnings Total Stockholders Equity Total Liabilities and Stockholders Equity $ 50,000 $ 75,500 Requirement (d) $ 2,500 Note : Please comment down for any further clarifications