Question

York casting services started the year with total assets of $110,000 and total liabilities of $60,000. the revenues and the expenses for the year amounted to $110,000 and $50,000â, respectively. during theâ year, the company did not issue any commonâ stock, but it distributed dividends of $45,000. calculate the amount of increase or decrease inâ stockholders' equity for the year.

Answer 1

York assets started the  year with $110,000-$60,000= $50,000 net assets. So for the current year, the revenues were $110,000 and expenses were $50,000 so add $110,000 to the $50,000 = $160,000 - $50,000= $110,000 net for this year. Since the total dividends are $45,000 then $45,000/$110,000= %40.9 increase in the stockholder's equity for the year which is very good.