Question

Sunland's Computer Repair Shop started the year with total assets of $310000 and total liabilities of $224000. During the year, the business recorded $518000 in computer repair revenues, $309000 in expenses, and Sunland paid dividends of $51100. Stockholders' equity at the end of the year was?

Answer 1

The stockholders' equity at the end of the year for Sunland's Computer Repair Shop is $243,900, calculated by adding the year's net income to the beginning equity and subtracting dividends paid.

Step-by-step explanation:

To determine the stockholders' equity at the end of the year for Sunland's Computer Repair Shop, we must first calculate the net income by subtracting expenses from revenues, then adjust the beginning stockholders' equity by adding the net income and deducting the dividends paid.

First, calculate the net income:

Net Income = Computer Repair Revenues - Expenses

Net Income = $518,000 - $309,000

Net Income = $209,000

Now, find the beginning stockholders' equity:

Beginning Stockholders' Equity = Total Assets - Total Liabilities

Beginning Stockholders' Equity = $310,000 - $224,000

Beginning Stockholders' Equity = $86,000

Finally, calculate the ending stockholders' equity:

Ending Stockholders' Equity = Beginning Stockholders' Equity + Net Income - Dividends Paid

Ending Stockholders' Equity = $86,000 + $209,000 - $51,100

Ending Stockholders' Equity = $243,900

Therefore, the stockholders' equity at the end of the year for Sunland's Computer Repair Shop is $243,900.