The following information applies to the questions displayed below. A company st
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Question
The following information applies to the questions displayed below. A company started the current year with assets of $712,000. liabilities of $356,000 and contributed capital of $212,000. During the current year, assets increased by $412,000, liabilities decreased by $56,000 and contributed capital increased by $287,000. There was no payment of dividends to owners during the year. What was the amount of the change in total stockholders' equity during the year? $ 114,000 increase $ 231,000 increase $ 468,000 increase $ 287,000 increaseExplanation / Answer
Total shareholder’s equity = Total assets – total liabilities
Shareholder’s equity at the beginning of the year would be:
Total shareholder’s equity = 712,000 – 356,000
= 356,000
Shareholder’s equity at the end of the year would be:
Total shareholder’s equity = (712,000 +412,000) – (356,000 -56,000)
= 1124,000 – 300,000
= 824,000
Change in shareholder’s equity = beginning shareholder’s equity – ending shareholder’s equity
= 824,000 -356,000
= 468,000
Therefore, shareholder’s equity has been increased by 468,000.
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