Saira’s Maid Service began the year with total assets of $120,000 and stockholders’ equity of $40,000.
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 are total liabilities at the end of the year? – Q/A (Question and Answer)
Test Answer
Answer:
$105,000 (First, determine the ending balance of stockholders’ equity, which is the sum of the beginning balance of stockholders’ equity plus net income less the dividends. $40,000 + $90,000 – $20,000 = $110,000 At the end of the period, total assets must equal the total of liabilities plus stockholders’ equity. Assets = Liabilities + Stockholders’ Equity $215,000 = Liabilities + $110,000 Liabilities = $105,000)
Recource Ch.1 Wiley Plus MC
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