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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, Year 2, the following information was drawn from the accounting records of Carter Company: cash of $475; land of $2,625; notes payable of $775; and common stock of $1,705. Required a. Determine the amount of retained earnings as of January 1, Year 2. b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $575 cash dividend to the stockholders. Can the company pay this dividend? c. As of January 1, Year 2, what percentage of the assets were acquired from creditors? d. As of January 1, Year 2, what percentage of the assets were acquired from investors? e. As of January 1, Year 2, what percentage of the assets were acquired from retained earnings? f. Create an accounting equation using percentages instead of dollar amounts on the right side of the equation. g. During Year 2, Carter Company earned cash revenue of $720, paid cash expenses of $410, and paid a cash dividend of $61. (Hint. It is helpful to record these events under an accounting equation before preparing the statements.) g-1. Prepare an income statement dated December 31, Year 2. g-2. Prepare a statement of changes in stockholders' equity dated December 31, Year 2. g-3. Prepare a balance sheet dated December 31, Year 2. g-4. Prepare a statement of cash flows dated December 31, Year 2. j. What is the balance in the Revenue account on January 1, Year 3? Complete this question by entering your answers in the tabs below. Req A and B Req C to E Req F Events Req G Beginning balance 1 2 3 Ending balance Assets Cash + Land Req G1 During Year 2, Carter Company earned cash revenue of $720, paid cash expenses of $410, and paid a cash dividend of $61. (Hint: It is helpful to record these events under an accounting equation before preparing the statements.) (Enter any decreases to account balances with a minus sign. Not all cells require entry.) = = Req G2 CARTER COMPANY Accounting Equation as of December 31, Year 2 Liabilities + Notes Payable + Req G3 Req G4 Common Stock Stockholders' Equity Retained Earnings + Req J Account Titles for Retained Earnings
Transcribed Image Text:On January 1, Year 2, the following information was drawn from the accounting records of Carter Company: cash of $475; land of $2,625; notes payable of $775; and common stock of $1,705. Required a. Determine the amount of retained earnings as of January 1, Year 2. b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $575 cash dividend to the stockholders. Can the company pay this dividend? c. As of January 1, Year 2, what percentage of the assets were acquired from creditors? d. As of January 1, Year 2, what percentage of the assets were acquired from investors? e. As of January 1, Year 2, what percentage of the assets were acquired from retained earnings? f. Create an accounting equation using percentages instead of dollar amounts on the right side of the equation. g. During Year 2, Carter Company earned cash revenue of $720, paid cash expenses of $410, and paid a cash dividend of $61. (Hint. It is helpful to record these events under an accounting equation before preparing the statements.) g-1. Prepare an income statement dated December 31, Year 2. g-2. Prepare a statement of changes in stockholders' equity dated December 31, Year 2. g-3. Prepare a balance sheet dated December 31, Year 2. g-4. Prepare a statement of cash flows dated December 31, Year 2. j. What is the balance in the Revenue account on January 1, Year 3? Complete this question by entering your answers in the tabs below. Req A and B Req C to E Req F Events Req G Beginning balance 1 2 3 Ending balance Assets Cash + Land Req G1 During Year 2, Carter Company earned cash revenue of $720, paid cash expenses of $410, and paid a cash dividend of $61. (Hint: It is helpful to record these events under an accounting equation before preparing the statements.) (Enter any decreases to account balances with a minus sign. Not all cells require entry.) = = Req G2 CARTER COMPANY Accounting Equation as of December 31, Year 2 Liabilities + Notes Payable + Req G3 Req G4 Common Stock Stockholders' Equity Retained Earnings + Req J Account Titles for Retained Earnings
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