Sing Tao inc.began operations on June 2, 2011.During June, Sing Tao sold ordinary shares for HK$11,450,000, earned Revenue of HK$2,020,000, incurred expenses of HK$1,030,000, and paid dividends of HK$30,000.Equity at the end of June is

Question

Quizplus · Accepted Answer

To calculate the equity at the end of June, we need to use the accounting equation: Assets = Liabilities + Equity. 
Since the question does not provide information about liabilities, we will assume that there are no liabilities. 
Therefore, the equity at the beginning of June was zero (since it was the first month of operations). 
The net income for June was: 
Revenue - Expenses = HK$2,020,000 - HK$1,030,000 = HK$990,000 
The dividends paid do not affect the net income, they are just a distribution of profits to shareholders. 
Thus, the equity at the end of June is: 
HK$11,450,000 (shares sold) + HK$990,000 (net income) - HK$30,000 (dividends) = HK$12,410,000. 
Therefore, the correct answer is C.

Sing Tao Inc