Tennessee Company experienced the following events during 2016. 1. Acquired $50,000 cash from the issue of common
Question:
Tennessee Company experienced the following events during 2016.
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, 2016, 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.
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b. Prepare an income statement, statement of changes in equity, year-end balance sheet, and statement of cash flows for the 2016 accounting period.
c. Determine the percentage of assets that were provided by retained earnings. How much cash is in the retained earnings account?
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...
Step by Step Answer:
a Tennessee Company Accounting Equation for 2016 Assets Liabilities Stockholders Equity Event Cash Land Notes Payable Com Stock Retained Earnings Acct ...View the full answer
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
