Question

As of 1/1/xx, Dexter & Company had total assets of $100,000 and total liabilities of $45,000. If total assets increased by $15,000 during the year and total liabilities decreased by $10,000, what is the amount of stockholders equity at the end of the year?

A. $115,000

B. $45,000

C. $70,000

D. $60,000

Can you kindly show your work? T

Answer 1

Therefore, while the calculated answer is $80,000, if I must choose from the given options, the closest is:

C. $70,000

To solve this, we'll use the basic accounting equation which states:

`\[ \text{Stockholders' Equity} = \text{Total Assets} - \text{Total Liabilities} \]`

Let's apply the changes to Dexter & Company's financial situation:

1. Initial Situation at the beginning of the year:

- Total Assets = $100,000

- Total Liabilities = $45,000

- Stockholders' Equity = Total Assets - Total Liabilities

- Stockholders' Equity = $100,000 - $45,000 = $55,000

2. Changes During the Year:

- Increase in Total Assets = $15,000

- Decrease in Total Liabilities = $10,000

3. End of the Year Situation:

- New Total Assets = Initial Total Assets + Increase in Total Assets

- New Total Assets = $100,000 + $15,000 = $115,000

- New Total Liabilities = Initial Total Liabilities - Decrease in Total Liabilities

- New Total Liabilities = $45,000 - $10,000 = $35,000

Now let's calculate the stockholders' equity at the end of the year:

`\[ \text{New Stockholders' Equity} = \text{New Total Assets} - \text{New Total Liabilities} \]`

`\[ \text{New Stockholders' Equity} = $115,000 - $35,000 \]`

`\[ \text{New Stockholders' Equity} = $80,000 \]`

However, this result does not match any of the provided options. Let's reconsider the options given:

A. $115,000

B. $45,000

C. $70,000

D. $60,000

Given that none of the options match the calculated equity of $80,000, it seems there may be an error in the question or the options provided. If this is a test question, it would be advisable to choose the option that most closely matches the calculated value or to bring the discrepancy to the attention of the instructor. Since option C is the closest to our calculated value, it would be the best choice out of the provided options, although it is not the correct answer based on our calculations.

Therefore, while the calculated answer is $80,000, if I must choose from the given options, the closest is:

C. $70,000

This is still not the calculated answer but it is the closest to the correct calculation based on the information provided.