Question

During 2013, its first year of operations, Neko's Bakery had revenues of $60,000 and expenses of $33,000. The business paid dividends of $22,000. What is the amount of stockholders' equity at December 31, 2014?

Answer 1

The stakeholders' equity is $5,000

Step-by-step explanation:

The stakeholders' equity is the total asset available to shareholders after all liabilities and debts have been paid off.

The formula for calculating stakeholders' equity is given as:

Stakeholders' equity = Total assets - Total liabilities

To calculate this, we have to group the transactions into assets and liabilities:

Assets:

Revenues = $60,000 (Total assets)

Liabilities:

Expenses = $33,000

Dividends paid = $22,000

Total Liabilities = $55,000

Therefore:

Stakeholders' equity = 60,000 - 55,000 = $5,000

Answer 2

$5,000

Step-by-step explanation:

Stockholders Equity Includes the Add-in-capital par value, Add-in-capital excess value of Common and Preferred, Net income accumulated value and dividends.

Ending Stockholders Equity = Beginning Stockholders Equity + Income for the period - Dividend paid During the period

As first year of Operation the value of stockholders equity is considered as $0

Ending Stockholders Equity = $0 + ($60,000 - $33,000) - $22,000

Ending Stockholders Equity = $27,000 - $22,000

Ending Stockholders Equity = $5,000