Question

In: Accounting

Maben Company was started on January 1, 2018, and experienced the following events during its first...

Maben Company was started on January 1, 2018, and experienced the following events during its first year of operation:

Acquired $35,000 cash from the issue of common stock.

Borrowed $47,000 cash from National Bank.

Earned cash revenues of $63,000 for performing services.

Paid cash expenses of $52,500.

Paid a $2,500 cash dividend to the stockholders.

Acquired an additional $35,000 cash from the issue of common stock.

Paid $12,000 cash to reduce the principal balance of the bank note.

Paid $46,000 cash to purchase land.

Determined that the market value of the land is $64,000.

Determine the percentage of assets that were provided by investors, creditors, and earnings. (Round your answers to 2 decimal places.) Just need investors and Earnings please

Assets
Investors %
Creditors 30.97 %
Earnings %

Solutions

Expert Solution

Firstly we need to calculating ending cash balance for calculating total assets at the end which is shown as follows:-

  Calculation of Ending Cash Balance (Amounts in $)

Cash from issue of common stock 35,000
Add: Borrowing from National bank 47,000
Add: Received service revenue 63,000
Less: Paid cash expenses (52,500)
Less: Paid cash dividend (2,500)
Add: Received from additional issue of shares 35,000
Less: Repayment of bank note (12,000)
Less: Acquired land (46,000)
Ending cash balance 67,000

Total assets = Land+Cash

= $46,000+$67,000 = $113,000

Ending balance of Common Stock = $35,000+$35,000 = $70,000

Ending Balance of Bank Note = $47,000 - $12,000 = $35,000

Retained Earnings balance = Revenues - Expenses - Dividends

= $63,000 - $52,500 - $2,500 = $8,000

Investors % of Assets = Common Stock/Assets

= $70,000/$113,000 = 61.95%

Creditors % of Assets = Borrowings from Bank/Assets

= $35,000/$113,000 = 30.97%

Earnings % of Assets = Retained Earnings/Assets

= $8,000/$113,000 = 7.08%


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