At September 1, 2011, Crews Co.reported equity of ₤136,000.During the month, Crews generated revenues of ₤20,000, incurred expenses of ₤12,000, purchased equipment for ₤5,000 and paid dividends of ₤2,000.What is the amount of equity at September 30, 2011?

Question

Quizplus · Accepted Answer

The equity at September 30, 2011, is calculated by adjusting the initial equity with the net income (revenues minus expenses) and subtracting dividends. Initial equity is ₤136,000. Net income is ₤20,000 - ₤12,000 = ₤8,000. Dividends paid are ₤2,000. Therefore, the new equity is ₤136,000 + ₤8,000 - ₤2,000 = ₤142,000. The equipment purchase does not affect equity directly.