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. Total assets at the end of the year were $215,000. How much was stockholders' equity at the end of the year?
A. $130,000
B. $110,000
C. $150,000
D. $135,000

Answer 1

Answer:

B. $110,000

Explanation:

The computation of the stockholders' equity at the end of the year is shown below:

= Stockholders' equity beginning balance + net income earned - cash dividend paid

= $40,000 + $90,000 - $20,000

= $110,000

Simply we added the net income and deduct the cash dividend paid to the stockholder equity beginning balance

All other information which is given is not considered. Hence, ignored it