Centro-matic Company began the year with stockholders' equity of $30,000.During the year, Centro-matic issued additional shares of stock in exchange for cash of $42,000, recorded expenses of $120,000, and paid dividends of $8,000.If Centro-matic's ending stockholders' equity was $112,000, what was the company's revenue for the year?

Question

Quizplus · Accepted Answer

The change in stockholders' equity is calculated as follows: Ending Equity - Beginning Equity = Change in Equity. Thus, $112,000 - $30,000 = $82,000. This change includes new stock issued ($42,000), dividends paid (-$8,000), and net income, which is revenue minus expenses. To find the revenue, rearrange the equation: Revenue = Change in Equity - New Stock + Dividends + Expenses. Substituting the given values: Revenue = $82,000 - $42,000 + $8,000 + $120,000 = $168,000.

Centro-Matic Company Began the Year with Stockholders' Equity of $30,000