At September 1, 2014, Crews Co. reported equity of ₤204,000. During the month, Crews generated revenues of ₤30,000, incurred expenses of ₤18,000, purchased equipment for ₤7,500 and paid dividends of ₤3,000. What is the amount of equity at September 30, 2014?

Question

Quizplus · Accepted Answer

Equity increases by the net income (₤30,000 - ₤18,000 = ₤12,000) and decreases by dividends (₤3,000). So, the new equity is ₤204,000 + ₤12,000 - ₤3,000 = ₤213,000. Equipment purchase does not affect equity directly.