Question

Joe’s Repair Shop started the year with total assets of $200,000 and total liabilities of $160,000. During the year the business recorded $420,000 in revenues, $220,000 in expenses, and dividends of $40,000. It also issued $10,000 of additional stock to its shareholders. What is the stockholders’ equity at the end of the year? $210,000 $200,000 $170,000 $250,000 $140,000

Answer 1

Answer:

The stockholders’ equity at the end of the year is $210,000

Explanation:

The computation of the ending stockholder equity is shown below

= Opening balance of equity + issued shares + retained earnings

where,

Opening balance of equity = Total assets - total liabilities

                                             = $200,000 - $160,000

                                             = $40,000

The issued shares is $10,000

And, the retained earning = Revenue - expenses - dividend

                                           = $420,000 - $220,000 - $40,000

                                           = $160,000

Now put these values to the above formula

So, the answer would be equal to

= $40,000 + $10,000 + $160,000

= $210,000