Question

Required information [The following information applies to the questions displayed below.) Mark's Consulting experienced the following transactions for 2018, its first year of operations, and 2019. Assume that all transactions involve the receipt or payment of cash. Transactions for 2018 1. Acquired $70,000 by issuing common stock. 2. Received $120,000 cash for providing services to customers. 3. Borrowed $19,000 cash from creditors. 4. Paid expenses amounting to $56,000. 5. Purchased land for $35,000 cash. Transactions for 2019 Beginning account balances for 2019 are: Cash Land Notes payable Common stock Retained earnings $118,000 35,000 19,000 70,000 64,000 1. Acquired an additional $24,000 from the issue of common stock. 2. Received $134,000 for providing services. 3. Paid $14,000 to creditors to reduce loan. 4. Paid expenses amounting to $71,000. 5. Paid a $13,000 dividend to the stockholders. 6. Determined that the market value of the land is $45,000.

Answer 1

1)

MARK'S CONSULTING
Accounting Equation for 2018
Event	Asset			=	Liabilities	+	Stockholders' Equity			Account titles for Retained Earnings
	Cash	+	Land	=	Notes Payable	+	Common Stock	+	Retained Earnings
1	$70000	+		=		+	$70000	+
2	120000	+		=		+		+	120000	Revenue
3	19000	+		=	19000	+		+
4	-56000	+		=		+		+	-56000	Expenses
5	-35000	+	35000	=		+		+
Totals	$118000	+	35000	=	19000	+	70000	+	64000

2)

MARK'S CONSULTING
Accounting Equation for 2019
Event	Asset			=	Liabilities	+	Stockholders' Equity			Account titles for Retained Earnings
	Cash	+	Land	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beg. Bal.	$118000	+	35000	=	19000	+	70000	+	64000
1.	24000	+		=		+	24000	+
2.	134000	+		=		+		+	134000	Revenue
3.	-14000	+		=	-14000	+		+
4.	-71000	+		=		+		+	-71000	Expenses
5.	-13000	+		=		+		+	-13000	Dividend
6.		+		=		+		+
Totals	$178000	+	35000	=	5000	+	94000	+	114000

The market value of the land does not have any effect on the accounting equation.