On January 1, 2016, the following information was drawn from the accounting reco

Question

On January 1, 2016, the following information was drawn from the accounting records of Carter Company: cash of $275; land of $2,025; notes payable of $575; and common stock of $1,150.

Required a. Determine the amount of retained earnings as of January 1, 2016.

b. After looking at the amount of retained earnings, the chief officer (CEO) wants to pay $375 cash dividend to the stockholders. Can the Company pay this dividend?

Yes

or

No

c. As of January 1, 2016, what percent of the assests were acquired from creditors? (Round answer to one decimal place )

d. As of January 1,2016, what percent of the assets were acquired from investors? (Round answer to one decimal place)

e. As of of January 1,2016, what percent of the assets were aquired from retained earnings?(Round answer to one decimal place)

f. Create an accounting equatiion using percentages instead of dollar amounts on the right side of the equation? Round percentage answer to one decimal place)

g. During 2016, Carter company earned cash revenue of $560, paid cash expenses of $330, and paid a cash dividend of $53. (Enter any decreases to account balances with a minus sign. Select "NA" if there is no affect on the "Account Titles for Retained Earnings.")

g-1. Prepare an income statement dated December 31, 2016.

g-2. Prepare a statement of changes in stockholders' equity dated December 31, 2016.

g-3. Prepare a balance sheet dated December 31, 2016.

g-4. Prepare a statement of cash flows dated December 31, 2016. (Amounts to be deducted should be indicated with a minues sign.)

j. What is the balance in the Revenue account on January 1,2016?

Explanation / Answer

Note:

As per rule, I can answer maximum 4 parts of the question. So I am answering first 4 parts of this question.

(a). Amount of retained earnings as of January 1, 2016;

Amount of Retained earnings = $575

Explanation;

As per accounting equation. We will calculate retained earnings as follow;

(Cash $275 + Land $2025 – Note payable $575 – $1150) = $575

(b).

Answer will be (NO)

Explanation;

As per information of the question, Carter company have only available cash of $275. So dividend amount of $375 can not be given out of this avaialble cash.

(c).

Answer is 25% (Approx.)

Explanation;

Total assets ($275 + $2025) = $2300

Creditors = $575

So percentage of assets acquired from creditors ($575 / $2300) = 25%

(d).

Answer is 50%

Explanation;

Total assets ($275 + $2025) = $2300

Common Stock = $1150

So percentage of assets acquired from investors ($1150 / $2300) = 50%

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.