Durango, Inc., experienced the following events during 2011.
1. Acquired \(\$ 55,000\) cash from the issue of common stock.
2. Paid \(\$ 15,000\) cash to purchase land.
3. Borrowed \(\$ 10,000\) cash from First Bank.
4. Provided services for \(\$ 28,000\) cash.
5. Paid \(\$ 2,500\) cash for utilities expense.
6. Paid \(\$ 11,000\) cash for other operating expenses.
7. Paid a \(\$ 2,000\) cash dividend to the stockholders.
8. Determined that the market value of the land purchased in Event 2 is \(\$ 23,000\).

Required

a. The January 1, 2011, 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.

b. Prepare an income statement, statement of changes in stockholders' equity, year-end balance sheet, and statement of cash flows for the 2011 accounting period.

c. Determine the percentage of assets that were provided by retained earnings. How much cash is in the retained earnings account?

Transcribed Image Text:

DURANGO, INC. Accounting Equation Acct. Titles Event Assets = Liabilities + Stockholders' Equity for RE Notes Common Retained Cash Land Payable Stock Earnings Balance 1/1/2011 12,000 25,000 0 15,000 22,000 1. 55,000 55,000