Exercise 1-19B Preparing financial statements Carolina Company experienced the following events during Year 3. 1. Acquired $50,000 cash from the issue of common stock. 2. Paid $15,000 cash to purchase land. 3. Borrowed $25,000 cash. 4. Provided services for $60,000 cash. 5. Paid $12,000 cash for rent expense. 6. Paid $22,000 cash for other operating expenses. 7. Paid a $5,000 cash dividend to the stockholders. 8. Determined that the market value of the land purchased in Event 2 is now $16,500. Required a. The January 1, Year 3, general ledger account balances are shown in the following accounting equation. Record the eight events in the appropriate general ledger accounts. 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. CAROLINA COMPANY Accounting Equation Assets Event Balance 1/1/Year 3 1. Cash Land 15,000 10,000 50,000 Liabilities Notes Payable + Stockholders' Equity Acct. Titles for RE Common Stock Retained Earnings 0 20,000 50,000 5,000 b. Prepare an income statement, statement of changes in equity, year-end balance sheet, and state- ment of cash flows for the Year 3 accounting period. c. Determine the percentage of assets that were provided by retained earnings (round to 3 decimal places). How much cash is in the retained earnings account? Paragraph Styles Carolina Company Accounting Equation for Year 3 Assets Event Cash 15,000 + Land 10,000 = Liabilities + Notes Stockholders' Equity Com. Retained Acct. Title/RE 20,000 5,000 Payable + Stock + Earnings -0- Bal. 1/1/14 1. Issued stk. 2. Pur. Land 3. Loan 4. Provide Svc. 5. Paid Rent 6. Pd. Op. Exp. 7. Paid Div. 8. Land Value Totals 96,000 + 25,000 = 25,000 + 70,000 + Carolina Company Income Statement For the Year Ended December 31, Year 3 Service Revenue Rent Expense Operating Expense Net Income Carolina Company Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 3 Beginning Common Stock $20,000 Ending Common Stock Beginning Retained Earnings $ 5,000 Ending Retained Earnings Total Stockholders' Equity Assets Carolina Company Balance Sheet As of December 31, Year 3 Total Assets Liabilities Notes Payable Total Liabilities Stockholders' Equity Total Stockholders' Equity 7 $25,000 Editing Total Liabilities and Stockholders' Equity $121,000 7 Paragraph Carolina Company Statement of Cash Flows For the Year Ended December 31, Year 3 Cash Flows From Operating Activities: Net Cash Flow from Operating Activities Cash Flows From Investing Activities: Net Cash Flow from Investing Activities Cash Flows From Financing Activities: Net Cash Flow from Financing Activities Net Increase in Cash Plus: Beginning Cash Balance Ending Cash Balance Percentage of assets provided by retained earnings: % Styles $26,000 (can/cannot) be directly traced to retained earnings. (are/are not) used to acquire assets or pay Cash Retained earnings liabilities or pay dividends.