Final Answer:
The net effect on stockholders' equity is a decrease of $410,000. However, none of the provided options exactly match this amount. The closest option is (a) Decrease of $355,000..
Step-by-step explanation:
The declaration of dividends and the increase in accounts receivable both lead to a decrease in stockholders' equity. Dividends represent a distribution of profits to shareholders, reducing the retained earnings component of equity. On the other hand, an increase in accounts receivable signals that services have been provided but payment is pending, also affecting equity. The purchase of equipment, however, is a capital expenditure and doesn't directly impact equity.
Let's break down the calculations:
- Declaration of dividends: Decrease = $250,000
- Increase in accounts receivable: Decrease = $160,000
- Purchase of equipment: No direct effect on equity
The net effect on stockholders' equity is the sum of these changes:
Net Effect = -$250,000 - $160,000 + $0 = -$410,000
Therefore, the correct net effect on stockholders' equity is a decrease of $410,000. However, none of the provided options exactly match this amount. The closest option is (a) Decrease of $355,000 which might be a typographical error in the question or options. If the question is accurate, the closest provided option is the best choice, reflecting a decrease in equity.