Question

Mirr, Inc. was incorporated on January 1, 2010, with proceeds from the issuance of $750,000 in stock and borrowed funds of $110,000. During the first year of operations, revenues from sales and consulting amounted to $82,000, and operating costs and expenses totaled $64,000. On December 15, Mirr declared a $3,000 cash dividend, payable to stockholders on January 15, 2011. No additional activities affected owners' equity in 2010. Mirr's liabilities increased to $120,000 by December 31, 2010. On Mirr's December 31, 2010, balance sheet, total assets should be reported at ________.

Answer 1

Answer: the correct answer is $ 885,000

Explanation:

Mirr began operations on January 1, 2010

Assets= Liabilities + Patrimony or owner's equity

$860,000 = $110,000+ $750,000

In the first year liabilities grew to $120,000 and patrimony increased to $765,000 which is $750,000 beginning balance + $18,000 ($82,000 revenues - $64,000 expenses) - $ 3,000 declared dividends.

So for December 31, 2010 the assets should be

$885,000 = $120,000 + $ 765,000.