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ID: 2598669 • Letter: F

Question

File Edit View History Bookmarks Window Help ezto.mheducation.com CUMULATIVE TEST OPTION VE TEST OPTION Question 1 (of 65) On January 1,2016, the following information was drawn from the accounting records of Carter Company: cash of $300; land of $2,100; notes payable of $600; and common stock of $1,080 Required a. Determine the amount of retained earnings as of January 1, 2016 nt of retained gs S720 b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $400 cash dividend to the stockholders. Can the company pay this dividend? O Yes No As of January 1. 2016, what percent of the assets were acquired from creditors? (Round your answer to 1 decimal place.) c. Percent of assets acquired

Explanation / Answer

300/ 2400

=12.5%

2100 /2400

= 87.5%

600 / 2400

=25%

1080 / 2400

=45%

720 / 2400

= 30%

Operating Expenses

[Decrease]

Cash dividend

[Decrease]

g-1 Income statement

Service revenue = 580

less: Operating Expenses = (340)

Net income = 240

g-2 Statement of change in Stockholders's equity

Beginning common stock = 1080

Add: common stock issued during the year = 0

Ending common stock =1080

Beginning retained earnings = 720

Add: net income = 240
less: Dividend = 54

Ending retained earnings = 906

Total stockholders' equity = 1986

g-3 Balance Sheet

Assets

Cash [186+300] 486

Land 2100

Total Assets 2586

Liabilities

Notes payable 600

Total Liabilities 600

stockholders' equity

Common stock 1080

retained earnings 906

Total stockholders' equity 1986

Total Liabilities and stockholders' equity 2586

g-4 Statement of cash flows

Cash flow from operating activities

Net income 240

Net Cash flow provided by operating activities 240

Cash flow from Financing activities

Dividend (54)

Net Cash flow used by financing activities (54)

Cash flow from Investing activities 0

Net Cash flow from investing activities 0

Net increase in cash 186

Add: Cash at beginning 300

Cash at end 486

j. Balance in the revenue account = $0 (revenue account does not have any opening and closing balances)

Assets = liabilities + Stockholders' Equity Cash + Land = Notes payable + Common stock + Retained earnings