In: Accounting
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
|
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%