At December 31, 2012, HIBS, Inc. reported net income of $15,000. The ending owne

Question

At December 31, 2012, HIBS, Inc. reported net income of $15,000. The ending owner’s equity is $20,000. During the year, HIBS issued additional common stock for $2,600 and paid dividends of $6,000. Which of the following statements is TRUE. a. One of the line items on HIBS’s Income Statement is Dividend Expense, $6,000. b.Owner’s equity increased by $15,000 during 2012. c. Beginning Owner’s Equity was $8,400. d. By issuing additional stock, HIBS increase net income by $2,600. e None is the correct answer

Explanation / Answer

Ending owner’s equity 20000 Less: Net income -15000 Less: Additional common stock -2600 Add: Dividends 6000 Beginning Owner’s Equity 8400 Option C Beginning Owner’s Equity was $8,400 is correct

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