The balance of? stockholders\' equity at the beginning of the year and the end o

ID: 2406907 • Letter: T

Question

The balance of? stockholders' equity at the beginning of the year and the end of the year was $ 45 comma 000 $45,000 and $ 64 comma 000 $64,000?, respectively. The company issued no common stock during the year. Dividends were $ 25 comma 000 $25,000. What was the net income or loss for the? year? A. Net loss of $ 89 comma 000 $89,000 B. Net income of $ 44 comma 000 $44,000 C. Net income of $ 89 comma 000 $89,000 D. Net loss of $ 44 comma 000 $44,000 Converse Florists? & Co. reported assets of $ 1 comma 100 $1,100 and equity of $ 300 $300. What is its debt? ratio? (Round your percentage answer to two decimal? places.) A. 77.73 77.73?% B. 27.27 27.27?% C. 72.73 72.73?% D. ?100.00%

Explanation / Answer

1) Solution: Net income: 44,000

Working:

Plus: Ending balance

64,000

Plus: Dividends

25,000

Less: Beginning balance

-45,000

Net income

44,000

2) Solution: 72.73%

Working:

Total liabilities = 1100 - 300 = 800

Debt ratio = Total liabilities / Total assets = 800 / 1100 = 72.73%