Question

Maben Company was started on January 1, 2018, and experienced the following events during its first year of operation:Acquired $37,000 cash from the issue of common stock.Borrowed $33,000 cash from National Bank.Earned cash revenues of $55,000 for performing services.Paid cash expenses of $48,500.Paid a $1,700 cash dividend to the stockholders.Acquired an additional $27,000 cash from the issue of common stock.Paid $8,000 cash to reduce the principal balance of the bank note.Paid $60,000 cash to purchase land.Determined that the market value of the land is $84,000.Determine the percentage of assets that were provided by investors, creditors, and earnings.

Answer 1

The assets as given above are as follows:
Acquired $37,000 cash from the issue of common stock.

Borrowed $33,000 cash from National Bank less paid $8,000 cash to reduce the principal balance of the bank note which gives a balance of $25,000.

Earned cash revenues of $55,000 for performing services less paid cash expenses of $48,500 less paid a $1,700 cash dividend to the stockholders.
This gives a total earned revenue of $4,800.

Acquired an additional $27,000 cash from the issue of common stock.

The market value of the land is $84,000 less paid $60,000 cash to purchase land = $24,000.

Total asset = $37,000 + $25,000 + $4,800 + $27,000 + $24,000 = $117,800

Total asset provided by investors, creditors, and earnings = $37,000 + $25,000 + $4,800 + $27,000 = 93,800

Percentage of assets that were provided by investors, creditors, and earnings = 93,800 / 117,800 x 100% = 79.6%