Question

Presented below are data for Cullumber Company
2020 2021
Assets, January 1 $4220 $5100
Liabilities, January 1 2570 ?
Stockholders' Equity, Jan. 1 ? ?
Dividends 864 634
Common Stock 761 661
Stockholders' Equity, Dec. 31 ? ?
Net Income 855 669
Stockholders' Equity at January 1, 2020 is:_______.
a) $243 loss.
b) $726 income.
c) $180 income.
d) $726 loss.

Answer 1

Answer:

$1,650.

Note: The correct asnwer is $1,650 based on the information provided in the question but it is not included in the option. Kindly confirm this from your teacher.

Explanation:

Stockholders' Equity at January 1, 2020 can be obtained using the accounting equation stated as follows:

Assets = Stockholders' Equity + Liabilities

Since on January 1, 2020, we have:

Assets = $4,220

Stockholders' Equity = ?

Liabilities = $2,570

Substituting the values into the accounting equation above, we have:

$4,220 = Stockholders' Equity + $2,570

Rearranging, we have:

Stockholders' Equity = $4,220 - $2,570 = $1,650

Therefore, Stockholders' Equity at January 1, 2020 is $1,650.