Question

Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. The company did not issue any additional shares of stock during the year. Total assets at the end of the year were $215,000. How much was stockholders' equity at the end of the year?

Answer 1

Answer:

Stockholders' equity at the end of the year was $110,000.

Explanation:

Beginning Balance of Stockholder's Equity = $40,000

Net Income for the year = $90,000

Dividend declared in the year = $20,000

Ending Balance of Stockholder's Equity = Beginning Balance of Stockholder's Equity + Net Income for the year -Dividend declared in the year

Ending Balance of Stockholder's Equity = $40,000 + $90,000 - $20,000

Ending Balance of Stockholder's Equity = $110,000