Brown Corporation reported the following amounts at the end of the first year of operations, December 31, 20X1:
Share capital $20,000;
Sales revenue $95,000;
Total assets $85,000,
No dividends,
and Total liabilities $35,000.
What would shareholders' equity and total expenses be?

Question

Brown Corporation reported the following amounts at the end of the first year of operations, December 31, 20X1: 
Share capital $20,000; 
Sales revenue $95,000; 
Total assets $85,000, 
No dividends, 
and Total liabilities $35,000. 
What would shareholders' equity and total expenses be?

Quizplus · Accepted Answer

Shareholders' equity is calculated as Total Assets minus Total Liabilities, which is $85,000 - $35,000 = $50,000. Total expenses can be derived from the equation: Sales Revenue - Expenses = Shareholders' Equity (assuming no dividends), so $95,000 - Expenses = $50,000, leading to Expenses = $45,000. However, there's a mistake in my explanation of calculating expenses; the correct approach to find expenses should involve considering net income and its impact on equity, but without explicit net income or profit information, we cannot directly calculate expenses from the given data. The initial calculation of shareholders' equity stands correct.

Brown Corporation Reported the Following Amounts at the End of the First