Wolfe Co.was incorporated on July 1,2014,with $200,000 from the issuance of stock and borrowed funds of $30,000.During the first year of operations,net income was $10,000.On December 15,Wolfe paid an $800 cash dividend.No additional activities affected owners' equity in 2014.At December 31,2014,Wolfe's liabilities had increased to $37,600.In Wolfe's December 31,2014,balance sheet,total assets should be reported at
A) $239,200.
B) $240,000.
C) $246,800.
D) $276,800.

Question

Quizplus · Accepted Answer

To calculate total assets at the end of the year, we start with the initial equity and liabilities and adjust for the year's activities. Initial equity is $200,000 from stock issuance. The company also borrowed $30,000, and its liabilities increased to $37,600, indicating an additional borrowing or other liabilities increase of $7,600 during the year. Net income was $10,000, but the company paid an $800 dividend. Thus, the change in equity is $10,000 - $800 = $9,200. The total equity and liabilities at the end of the year are $200,000 + $9,200 (equity increase) + $37,600 (total liabilities) = $246,800.

Wolfe Cowas Incorporated on July 1,2014,with $200,000 from the Issuance of of Stock