Preparing financial statements | Accounting homework help

Preparing financial statements

Dakota Company experienced the following events during 2010.

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 rent 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, 2010, 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.

DAKOTA COMPANY

Accounting Equation

 

Event

Assets

=

Liabilities

+

Stockholders’ Equity

Acct. Titles

for RE

 

Cash

Land

 

Notes
Payable

 

Common
Stock

Retained
Earnings

 

Balance
1/1/2010

2,000

12,000

 

0

 

6,000

8,000

 

1.

30,000

 

       

30,000

 

   

b. Prepare an income statement, statement of changes in equity, year-end balance sheet, and statement of cash flows for the 2010 accounting period.

c. Determine the percentage of assets that were provided by retained earnings. How much cash is in the retained earnings account?

d. What is the balance in the Service Revenue account on January 1, 2011?

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