Question

At the end of its first month of operations, JMP Consulting reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000; and Accounts Receivable, $10,000. Stockholders’ total investments for this first month was $5,000. There were no dividends in the first month. Calculate the amount of total stockholders’ equity reported on the balance sheet at month-end.

Answer 1

Answer:

The amount of total stockholders’ equity reported on the balance sheet at month-end is $30,000.

Explanation:

Stockholders’ equity comprises retained earnings, common stock and any other statutory reserves. The retained earnings is the accumulation of net income or loss over years minus dividend paid while common stock is the value of the shares owned by the owners or the public and the owners are entitled to dividends.

The amount of total stockholders’ equity reported on the balance sheet at month-end is simply $5,000 + $25,000 = $30,000.