Question

started 2018with total assets of $ 17 comma 000and total liabilities of $ 7 comma 000.At the end of 2018​,John'stotal assets stood at $ 10 comma 000and total liabilities were $ 6 comma 000.Requirements1.  Did the​ stockholders' equity of John Landscapingincrease or decrease during 2018​?By how​ much?2.  Identify the four possible reasons that​ stockholders' equity can change.

Answer 1

Answer:

Equity decrease by 6,000

possible explanation:

(A) Purchase of Treasury Stock will cause to:

decrease cash (assets) and decrease equity

if the company paid 1,000 liab and purchase 6,000 Treasury Stock

This will generate the end 2018 values

(B) long term assets totaled (destruction):

Long term equipment was totaled and therefore the loss decrease the equity

(C) net loss

A net loss will decrease the assets and equity

(D) cash dividends

the company had most of his equity on retained earnings account, so it paid out cash dividends.

Also, it could happen a combitation of hese factor.

The company purchase TS for 2,000

It distribute 1,000 cash dividends

it paid 1,000 liab

A long term asset was totaled for 2,000

This generate a net loss for 1,000

Explanation:

2017:

total assets        17,000

total liabilities   (7,000)

equiy                  10,000

2018:

total assets        10,000

total liabilities   (6,000)

equiy                   4,000

difference; 4,000 - 10,000 = 6,000