At the beginning of Year 2, Better Corp.'s accounting records had the following general ledger accounts and balances. BETTER CORP. Accounting Equation Accounting Titles for Retained Earnings Event Liabilities + Notes Payable Common Stock Assets Stockholders' Equit Cash 20,000 Land 30,000 Retained Earnings 29,000 Balance 01/01/Year 2 13,000 8,000 Better Corp. completed the following transactions during Year 2:. 1. Purchased land for $10,000 cash.
2. Acquired $35,000 cash from the issue of common stock.
3. Received $74,000 cash for providing services to customers.
4. Paid cash operating expenses of $41,000.
5. Borrowed $20,000 cash from the bank.
6. Paid a $10,000 cash dividend to the stockholders.
7. Determined that the market value of the land purchased in event 1 is $45,000.
Required:
a. Record the transactions 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
b. As of December 31, Year 2, determine the total amount of assets, liabilities, and stockholders' equity and present this information in the form of an accounting equation.
c. What is the amount of total assets, liabilities, and stockholders' equity as of January 1, Year 3?
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                                         BETTER CORP.

   A: The transactions in the appropriate general ledger accounts:

Formula:

Event        Assets   =    Liabilities    +   Stockholders’ Equity   Accounting Title                                                                                             for Retained

                                                                                                       Earnings

                 Cash   +   Land   =   Notes    +  Common   + Retained

                                                  Payable      Stock          Earnings

                 20,000     30,000     13,000       8,000      29,000

1.              (10,000)    10,000

2.             35,000                                   35,000

3.             74,000                                                      74,000 Service Revenue

4.            (41,000)                                                     (41,000) Operating exp.

5.            20,000                    20,000

6.            (10,000)                                                     (10,000)

7.                             N/A                                              N/A       N/A

B. The total amount of assets, liabilities, and stockholders' equity and present this information in the form of an accounting equation is:

Year 2:  88,000 +  40,000 = 33,000  + 43,000 +  52,000

C .The amount of total assets as of :

      January 1,

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BETTER CORP.

Event        Assets   =    Liabilities    +   Stockholders’ Equity   Accounting Titles

                                                                                               for Retained

                                                                                                 Earnings

                  Cash   +   Land   =   Notes    +  Common   + Retained

                                              Payable      Stock          Earnings

Balance

1/1/Yr 1      20,000     30,000     13,000       8,000      29,000

1.              (10,000)    10,000

2.             35,000                                   35,000

3.             74,000                                                      74,000 Service Revenue

4.            (41,000)                                                     (41,000) Operating exp.

5.            20,000                    20,000

6.            (10,000)                                                     (10,000)

7.                             N/A                                              N/A       N/A

b. Balance 31/12

 Yr 2     88,000 +  40,000 = 33,000  + 43,000 +  52,000

c. The amount of total assets as of January 1, Year 3 = $128,000; liabilities = $33,000; and stockholders' equity = $95,000.

Explanation:

The accounting equation states that total assets are equal to total liabilities and stockholders' equity.  This equation gives accounting two sides to every transaction.  This is known as the double-entry system of accounting.  And the two sides are always in agreement before and after each transaction.  The equation also implies that an entity's assets are funded by the creditors and the owners (stockholders).

answer; capital structure decision;