Question

Torres Travel’s stockholders' equity at the beginning of March 2017 was $200,000. During the month, the company earned net income of $50,000 and paid dividends of $10,000. At the end of March 2017, what is the amount of stockholders' equity? A : $240,000 B : $260,000 C : $150,000 D : $200,000

Answer 1

A : $240,000

Step-by-step explanation:

Provided information, we have

Opening stockholder's Equity = $200,000

Net income earned during the month = $50,000

Dividends paid during the month = $10,000

Stockholder's Equity = Common Stock + Retained Earnings

Retained Earnings = Net income - Dividend

= $50,000 - $10,000 = $40,000

Therefore, Stockholder's Equity at month end = $200,000 + $40,000 = $240,000

Correct option is

A : $240,000