Question

Precision camera services started the year with total assets of​ $90,000 and total liabilities of​ $65,000. the revenues and the expenses for the year amounted to​ $100,000 and​ $70,000, respectively. during the​ year, the company did not issue any common​ stock, but it distributed dividends of​ $40,000. what is the amount of​ stockholders' equity at the end of the​ year?

Answer 1

The stockholders' equity at the end of the year for Precision Camera Services is $15,000, which is calculated by taking the beginning equity, adding net income, and subtracting dividends paid.

Step-by-step explanation:

To calculate the amount of stockholders' equity at the end of the year for Precision Camera Services, you need to follow the accounting equation: Assets = Liabilities + Stockholders' Equity. We can rearrange this equation to solve for Stockholders' Equity: Stockholders' Equity = Assets - Liabilities.

At the start of the year, Precision Camera Services had total assets of $90,000 and total liabilities of $65,000. To determine the stockholders' equity at the beginning of the year, we subtract liabilities from assets, which gives us $90,000 - $65,000 = $25,000.

Throughout the year, the company generated revenues of $100,000 and incurred expenses of $70,000. The net income (revenues minus expenses) therefore is $100,000 - $70,000 = $30,000. No new common stock was issued, but the company distributed dividends of $40,000. The net income adds to the stockholders' equity, and the dividends reduce it.

The final stockholders' equity at year's end is calculated as the beginning stockholders' equity plus net income minus dividends:

$25,000 (beginning equity) + $30,000 (net income) - $40,000 (dividends) = $15,000

Thus, the amount of stockholders' equity at the end of the year is $15,000.

Answer 2

Calculation of the amount of stockholders’ equity at the end of the year;

First, we need to calculate the amount of stockholders’ equity at the beginning of the year with the help of the accounting equation as follows:

Beginning Equity = Beginning Assets – Beginning Liabilities

Beginning Equity = 90,000-65,000 = $25,000

Now we can calculate the ending equity using the following formula;

Ending Equity = Beginning Equity +Revenues – Expenses – Dividends

Ending Equity =25000+100000-70000-40000 = $15,000

Hence, the amount of stockholders’ equity at the end of the year is $15,000