Question Completion:
January 1 general ledger balances: Cash = $2,000, Land $12,000, Notes Payable $0, Common Stock $6,000, and Retained $8,000.
Answer:
Dakota Company
Event Assets = Liabilities + Stockholders Equity Account Titles
Cash Land = Accts Payable Common Retained for Retained
Stock Earnings Earnings
Balance 2,000 12,000 = 0 + 6,000 8,000
1. 30,000 = + 30,000
2. -10,000 +10,000
3. 10,000 = 10,000
4. 20,000 = 20,000 Service Revenue
5. -1,000 = -1,000 Utilities Expense
6. -15,000 = -15,000 Operating Exp.
7. -2,000 = -2,000
8. 700 = +700
Bal. $34,000 $22,700 = $10,000 + $36,700 $10,000
b-1. Income Statement for the year ended December 2018:
Service Revenue $20,000
Operating expenses 15,000
Utilities expense 1,000
Total expenses $16,000
Net Income $4,000
b-2. Statement of changes in equity for the year ended December 31, 2018:
Common stock, January 1 $6,000
Additional common stock 30,000
Land Revaluation 700
Common stock, Dec. 31 $36,700
Retained earnings,
January 1 8,000
Net Income 4,000
Dividends -2,000
Retained earnings $10,000
Total equity $46,700
b-3. Balance Sheet as of December 31, 2018:
Assets:
Cash $34,000
Land 22,700
Total assets $56,700
Liabilities and Equity:
Liabilities $10,000
Common stock 36,700
Retained earnings 10,000
Total liabilities and equity $56,700
c. Percentage of assets provided by retained earnings
= $10,000/$56,700 * 100 = 17.64%
Yes. The cash in retained earnings = $34,000 * 17.64% = $5,998.
Explanation:
a) Data and Calculations:
Analysis of Transactions during Year 2:
Cash $30,000 Common Stock $30,000
Land $12,000 Cash $12,000
Cash $10,000 Loan $10,000
Cash $20,000 Service Revenue $20,000
Utilities Expense $1,000 Cash $1,000
Operating Expenses $15,000 Cash $15,000
Dividends $2,000 Cash $2,000
Land $700 Revaluation $700
