Question

Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $10,000 in expenses. Stahl issued stock of $3,000 and paid dividends of $5,000 during the year.

Stockholders' equity changed by what amount from the beginning of the year to the end of the year?

Select one:

A. $3,000.

B. $1,000.

C. $15,000.

D. $4,000.

Answer 1

The correct answer is option (d).

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

Beginning equity = Total asset - total liabilities

= $20,000 - $5,000 = $15,000

Ending equity = Beginning equity + Revenues - Expenses + Issued stock - Dividend paid

= $15,000 + $16,000 - $10,000 + $3,000 - $5,000

= $19,000

So, the change in equity can be calculated as:

Change in equity = Ending equity - Beginning equity

= $19,000 - $15,000

=$4,000