On January 1, 2016, the following information was drawn from the accounting records of Carter Company: cash

Question:

On January 1, 2016, the following information was drawn from the accounting records of Carter

Company: cash of $800; land of $3,500; notes payable of $600; and common stock of $1,000.

Required

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

b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $1,000 cash dividend to the stockholders. Can the company pay this dividend? Why or why not?

c. As of January 1, 2016, what percent of the assets were acquired from creditors?

d. As of January 1, 2016, what percent of the assets were acquired from investors?

e. As of January 1, 2016, what percent 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 2016, Carter Company earned cash revenue of $1,800, paid cash expenses of $1,200, and paid a cash dividend of $500. Prepare an income statement, statement of changes in stockholders’ equity, a balance sheet, and a statement of cash flows dated December 31,

2016.

h. Comment on the terminology used to date each statement.

i. An appraiser determines that as of December 31, 2016, the market value of the land is $4,200. How will this fact change the financial statements?

j. What is the balance in the Revenue account on January 1, 2017?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...