On December 31, 2010, the net assets of Marino Manufacturing amounted to $40, 000.Net income calculated by using the financial capital maintenance concept amounted to $12, 000.During the year, additional common stock was issued for $8, 000, and $5, 000 of dividends were paid.The net assets at January 1, 2010, amounted to
A)$31, 000
B)$37, 000
C)$20, 000
D)$25, 000

Question

Quizplus · Accepted Answer

The net assets at the beginning of the year can be calculated using the formula:

Net assets at the end of the year = Net assets at the beginning of the year + Net income - Dividends

Substituting the given values:

$40,000 = Net assets at the beginning of the year + $12,000 - $5,000

Net assets at the beginning of the year = $25,000

Therefore, the answer is choice D) $25,000.

On December 31, 2010, the Net Assets of Marino Manufacturing