Question

During its first year of operations, Anthony Lupa set up Lupo Inc. and invested $15,000 in the corporation. The company earned $35,000 of revenues and incurred $23,000 of expenses. A cash dividend of $2,000 was paid to Anthony. At the end of the year, the company's equity totaled:

Answer 1

At the end of the year, the company's equity totaled: $25,000

Step-by-step explanation:

The company earned $35,000 of revenues and incurred $23,000 of expenses.

Net income = Revenue - Expenses = $35,000 - $23,000 = $12,000

Retained earnings of the company = Net income - Cash dividend = $12,000 - $2,000 = $10,000

At the end of the year, the company's equity = Anthony Lupa's invested + Retained earnings = $15,000 + $10,000 = $25,000