Question
In: Accounting
On January 1 of the current year, Jimmy's Sandwich Company reported stockholders’ equity totaling $125,000. During...
On January 1 of the current year, Jimmy's Sandwich Company reported stockholders’ equity totaling $125,000. During the current year, total revenues were $100,000 while total expenses were $89,500. Also, during the current year paid $24,000 in cash dividends. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $200,000, the change in total stockholders’ equity during the year was:
Solutions
Expert Solution
Equity would be changed with the amount of retained earnings.
Net income = Revenues – Expenses
= 100,000 – 89,500
= $10,500
Retained earnings = Net income – Cash dividends
= 10,500 – 24,000
= -$13,500
Answer: Equity decreases by $13,500.
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