Question

At the beginning of 2013, Yellowstone Corp had assets of $540,000 and liabilities of $320,000. During 2013, assets increased $50,000 and liabilities increased $10,000. What was stockholders' equity on December 31, 2013? A. $280,000 B. $160,000 C. $260,000 D. $380,000 E. None of the above

Answer 1

The answer is: C) $260,000

Step-by-step explanation:

We can calculate the stockholders' equity by using the basic accounting equation of a balance sheet:

Assets = Liabilities + Stockholders's equity

At the beginning of 2013, the stockholders's equity was:

Stockholders's equity = $540,000 - $320,000 = $220,000

If during 2013 assets increased by $50,000 and liabilities by $10,000 then:

Stockholders's equity = $590,000 - $330,000 = $260,000