Question

On January 1 of the current year, Jimmy's Sandwich Company, Inc. reported stockholders' equity totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year the business paid $20,000 to the stockholders. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in stockholders' equity during the year was:_________
a) A decrease of $9,500.
b) An increase of $9,500.
c) An increase of $30,500.
d) A decrease of $30,500.
e) An increase of 73,500.

Answer 1

A.nswer:

a) A decrease of $9,500.

Explanation:

Calculation for the change in total stockholders' equity

Using this formula

Change in total stockholders' equity = Total Revenues amount - Total Expenses amount - Dividends amount

Let plug in the formula

Change in total stockholders' equity =$96,000 - $85,500 - $20,000

Change in total stockholders' equity = Decrease of $9,500

Therefore the change in total stockholders' equity during the year was: a decrease of $9,500