1 2 Dakota Company experienced the following events during Year 2. 3 4 5 6 7 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, 85. Paid $1,000 cash for utilities 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. 15 16 17 18 9 10 11 12 13 Required: a. The January 1, Year 2, account balances are shown in the following accounting equation. Record the eight events in the appropriate accounts under an accounting equation. 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, Note: Enter any decreases to account balances with a minus sign. Not all cells require input. Event 19 20 21 Balance 1/1/Year 2 22 1 23 2 24 3 25 4 26 5 27 28 29 30 Totals 31 32 c-1. Determine the percentage of assets that were provided by retained earnings. 33 6 7 8 34 Percentage of assets 35 Assets Cash Cash dividend + + 2,000 30,000 + (12,000) 42 10,000 + 20,000 + (1,000) (15,000) (2,000) + Land DAKOTA COMPANY Accounting Equation for Year 2 Llabilities + + Notes Payable + + 12,000 12,000 C = $ $ $ $ $ $ 10,000 + $ $ 30,000 12,000 10,000 20,000 1,000 15,000 2,000 12,700 +20,000 36 c-2. Does the retained earning balance reflect the amount of cash that the company has available to pay dividends? 37 38 Does the retained earning balance reflect the cash for dividends? 39 40 d. Based on the December 31, Year 2, balance sheet, what is the largest cash dividend Dakota could pay? 41 42 43 Common Stock 6,000 30,000 Stockholders' Equity 4 Retained Earnings 8,000 20,000 (1,000) (15,000) (2,000) Account Titles for Retained Earnings Service revenue Utilities expense Operating expense Dividends