Question

​, an​ attorney, has a law​ corporation, christopher foley​, ​attorney, inc., that began the year with total assets of $ 145 comma 000​, total liabilities of $ 70 comma 000​, and​ stockholders' equity of $ 75 comma 000. During the​ year, christopher foley​, ​attorney, inc., earned revenue of $ 125 comma 000 and paid expenses of $ 35 comma 000. Christopher foley​, ​attorney, inc., also sold an additional $ 24 comma 000 of stock and paid $ 10 comma 000 in dividends. How much is the​ stockholders' equity in christopher foley​, ​attorney, inc., at​ year's end

Answer 1

Answer: The total stock holder's equity at year end is $179,000.

We calculate the stockholder's equity (SE) at year-end as follows:

`SE_(year end) = SE_(beginning of year) + Issues of common stock during the year + Retained Earnings`

We calculate Retained Earnings as follows:

`Retained Earnings = Revenues - Expenses - Dividends`

`Retained Earnings = 125,000 - 35,000 - 10,000`

`Retained Earnings = 80,000`

Substituting the value of Retained earnings in the ending stockholder equity formula we get,

`SE_(year end) = 75,000 + 24000 + 80,000`

`SE_(year end) = 179,000`