Based on the activities above, stockholders' equity of the Maverick Law Firm will be
A) increased by $20,000.
B) decreased by $5,000.
C) increased by $17,000.
D) decreased by $2,000.

Question

Quizplus · Accepted Answer

The net income of $25,000 will increase the retained earnings, and the declaration of $8,000 dividends will decrease the retained earnings. Therefore, the net effect on stockholders' equity will be an increase of $17,000 ($25,000 - $8,000). There is no mention of any other activities that would impact stockholders' equity.

Based on the Activities Above, Stockholders' Equity of the Maverick