Helena Co.began operations on January 1,2014,with $100,000 from the issuance of stock and borrowed funds of $15,000.Net income for 2014 was $5,000 and Helena paid a $400 cash dividend on December 15.No additional activities affected owners' equity in 2014.At December 31,2014,Helena's liabilities had increased to $18,800.In Helena's December 31,2014,balance sheet,total assets should be reported at
A) $119,600.
B) $120,000.
C) $123,400.
D) $138,400.

Question

Quizplus · Accepted Answer

Total assets at December 31, 2014 can be calculated using the basic accounting equation: Assets = Liabilities + Owner's Equity. 
Beginning owner's equity was $100,000 + $15,000 (issued stock and borrowed funds) = $115,000. 
Net income for the year was $5,000, and dividends paid were $400, so ending owner's equity is $115,000 + $5,000 - $400 = $119,600. 
Adding this to the liabilities of $18,800, we get total assets at December 31, 2014 of $123,400. Therefore, the correct answer is C.

Helena Cobegan Operations on January 1,2014,with $100,000 from the Issuance of of Stock