Complete A Table With Financial Transactions And Calculate Y

Complete a table with financial transactions and calculate year-end balances

I have to complete a table. These are the columns given in the table: Cash, Land, Notes Payable, Common Stock, Retained Earnings. The required entries are:

  1. Received $70,000 cash for providing services to customers.
  2. Paid rent expense, $15,000.
  3. Purchased land for $10,000 cash.
  4. Paid $5,000 on note payable.
  5. Paid operating expenses, $42,000.
  6. Paid cash dividend, $4,000.

Tasks:

  • (a) Record the transactions in the appropriate general ledger accounts.
  • Record the amounts of revenue, expense, and dividends in the Retained Earnings column.
  • Provide appropriate titles for these accounts in the last column of the table.
  • (b) Determine the total assets as of December 31, 2011.
  • (c) Determine the total stockholders' equity as of December 31, 2011.

Assistance with this accounting exercise is requested, noting that I haven't taken an accounting course in several years.

Paper For Above instruction

To accurately record these transactions and determine the financial position of the company as of December 31, 2011, it is essential to understand the fundamental accounting equations and principles. The primary accounting equation is Assets = Liabilities + Stockholders’ Equity. Each transaction affects this equation through changes in asset accounts, liabilities, or equity accounts such as common stock, retained earnings, revenue, expenses, and dividends.

The first step is to analyze each transaction and classify it appropriately. The entries will be reflected in the general ledger accounts: Cash, Land, Notes Payable, Common Stock, Revenue, Expenses, Dividends, and Retained Earnings. The entries will also be organized into a tabular format with the prescribed columns for assets, liabilities, stockholders’ equity components, and revenue/expenses/dividends in the Retained Earnings column.

Step 1: Recording Transactions

Transaction 1: Received $70,000 cash for providing services to customers.

This transaction increases Cash (asset) and records revenue, which impacts Retained Earnings through an increase. The journal entry is:

Debit: Cash $70,000

Credit: Service Revenue $70,000

Transaction 2: Paid rent expense, $15,000.

This reduces Cash and records an expense, decreasing Retained Earnings:

Debit: Rent Expense $15,000

Credit: Cash $15,000

Transaction 3: Purchased land for $10,000 cash.

This increases Land and decreases Cash:

Debit: Land $10,000

Credit: Cash $10,000

Transaction 4: Paid $5,000 on note payable.

This reduces Cash and Notes Payable (liability):

Debit: Notes Payable $5,000

Credit: Cash $5,000

Transaction 5: Paid operating expenses, $42,000.

This decreases Cash and records expenses:

Debit: Operating Expenses $42,000

Credit: Cash $42,000

Transaction 6: Paid cash dividend, $4,000.

This decreases Cash and increases Dividends, which reduce Retained Earnings:

Debit: Dividends $4,000

Credit: Cash $4,000

Step 2: Summarizing the Accounts

After recording all transactions, we summarize account balances:

  • Cash: $70,000 (from transaction 1) - $15,000 (rent) - $10,000 (land) - $5,000 (note payable) - $42,000 (expenses) - $4,000 (dividends) = $14,000.
  • Land: $10,000 (purchase).
  • Notes Payable: assumes initial balance and payment of $5,000, but without initial liability, the current balance is $5,000.
  • Common Stock: assumed initial; in this case, no stock issuance occurs in provided transactions.
  • Revenue: $70,000 (from transaction 1).
  • Expenses: $15,000 (rent) + $42,000 (operating expenses) = $57,000.
  • Dividends: $4,000.

Step 3: Calculating Retained Earnings, Total Assets, and Equity

The net income for the period is total revenue minus total expenses: $70,000 - $57,000 = $13,000.

Retained Earnings beginning balance is assumed zero (or prior balance not provided). Adjusted for net income and dividends:

Retained Earnings = Net Income - Dividends = $13,000 - $4,000 = $9,000.

Now, total assets as of December 31, 2011:

  • Cash: $14,000
  • Land: $10,000

Total Assets = $14,000 + $10,000 = $24,000.

Total Stockholders’ Equity includes Common Stock (assumed initial, say $10,000 for illustration), plus Retained Earnings:

Assuming no initial stock issuance, and no additional information, the total stockholders' equity is primarily composed of Retained Earnings, which is $9,000. If common stock issued is known, add that as well.

Therefore, stockholders’ equity is approximately $9,000, considering the net earnings after dividends, plus any initial funding.

Conclusion

By systematically recording each transaction in the general ledger, summing account balances, and applying basic accounting principles, we determine that as of December 31, 2011:

  • Total assets amount to approximately $24,000.
  • Total stockholders' equity is approximately $9,000, assuming no initial equity or stock issuance was provided beyond the transactions.

This exercise highlights the importance of meticulous record-keeping and understanding the effects of transactions on financial statements. It emphasizes how revenues, expenses, dividends, and asset-liability changes influence the company's financial position at year-end.

References

  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2021). Financial Accounting (13th ed.). McGraw-Hill Education.
  • Higgins, R. C. (2018). Analysis for Financial Management (11th ed.). McGraw-Hill Education.
  • Gibson, C. H. (2017). Financial Reporting and Analysis (13th ed.). Cengage Learning.
  • Wahlen, J. M., Baginski, S. P., & Bradshaw, M. (2020). Financial Reporting, Financial Statement Analysis, and Valuation (8th ed.). Cengage Learning.
  • Freeman, R. N. (2019). Fundamentals of Corporate Finance. McGraw-Hill Education.
  • Sharma, D. (2022). Principles of Financial Accounting. Pearson.
  • Stickney, C. P., Brown, P., & Wahlen, J. (2021). Financial Accounting: An Introduction to Concepts, Methods, and Uses (13th ed.). Cengage Learning.
  • AccountingCoach. (2023). Basic Accounting Principles. Retrieved from https://www.accountingcoach.com
  • Investopedia. (2023). Financial Statements. Retrieved from https://www.investopedia.com
  • Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis. Wiley.

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