Question

Chris's Maid Service began the year with total liabilities of $100,000 and stockholders' equity of $40,000. During the year the company earned $110,000 in net income and paid $5,000 in dividends. Total liabilities at the end of the year were $240,000. How much are total assets at the end of the year?

A) $385,000
B) $345,000
C) $95,000
D) $110,000
E) $335,000

Answer 1

Total assets at the end of the year for Chris's Maid Service are $385,000.

Step-by-step explanation:

Total liabilities at the end of the year are $240,000, and stockholders' equity at the beginning of the year is $40,000. Net income earned during the year is $110,000, and dividends paid are $5,000. To determine the total assets at the end of the year, we need to use the accounting equation: Assets = Liabilities + Stockholders' Equity. Rearranging the equation, we have Assets = $240,000 + $40,000 + $110,000 - $5,000. Calculating this, we get total assets at the end of the year to be $385,000.