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Plumbers-on-the-Go Ltd.started the year with total assets of $120,000 and total liabilities of $75,000.During the year, the business recorded $82,000 in service revenues, $45,000 in expenses, and paid dividends of $2,500.
-Shareholders' equity at the end of the year was
A)$79,500.
B)$45,000.
C)$82,000.
D)$77,000.

Question

Use the following information for questions 
Plumbers-on-the-Go Ltd.started the year with total assets of $120,000 and total liabilities of $75,000.During the year, the business recorded $82,000 in service revenues, $45,000 in expenses, and paid dividends of $2,500.
-Shareholders' equity at the end of the year was
A)$79,500.
B)$45,000.
C)$82,000.
D)$77,000.

Quizplus · Accepted Answer

Shareholders' equity at the beginning of the year was $45,000 ($120,000 - $75,000). During the year, net income was $37,000 ($82,000 - $45,000). After paying $2,500 in dividends, the ending shareholders' equity is $79,500 ($45,000 + $37,000 - $2,500).

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