Madden Company was started on January 1, 2011, and experienced the following events during its first year

Question:

Madden Company was started on January 1, 2011, and experienced the following events during its first year of operation.

1. Acquired $30,000 cash from the issue of common stock.

2. Borrowed $40,000 cash from National Bank.

3. Earned cash revenues of $48,000 for performing services.

4. Paid cash expenses of $45,000.

5. Paid a $1,000 cash dividend to the stockholders.

6. Acquired an additional $20,000 cash from the issue of common stock.

7. Paid $10,000 cash to reduce the principal balance of the bank note.

8. Paid $53,000 cash to purchase land.

9. Determined that the market value of the land is $75,000.

Required

a. Record the preceding transactions in the horizontal statements model. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first event is shown as an example.

b. Determine the amount of total assets that Madden would report on the December 31, 2011, balance sheet.
c. Identify the sources of the assets that Madden would report on the December 31, 2011, balance sheet. Determine the amount of each of these sources.
d. Determine the net income that Madden would report on the 2011 income statement.
Explain why dividends do not appear on the income statement.
e. Determine the net cash flows from operating activities, financing activities, and investing activities that Madden would report on the 2011 statement of cash flows.
f. Determine the percentage of assets that were provided by investors, creditors, andearnings.

Dividend
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...