Stahl Consulting started the year with total assets of $60,000 and total liabilities of $15,000.During the year, the business recorded $48,000 in catering revenues and $30,000 in expenses.Stahl issued stock of $9,000 and paid dividends of $15,000 during the year.Stockholders' equity changed by what amount from the beginning of the year to the end of the year?

Question

Quizplus · Accepted Answer

We can calculate the change in stockholders' equity by using the accounting equation: 
Assets = Liabilities + Stockholders' Equity

At the beginning of the year: 
$60,000 = $15,000 + Stockholders' Equity 
Stockholders' Equity = $45,000

At the end of the year: 
Assets = Revenues - Expenses + Stock Issued - Dividends + Stockholders' Equity 
$63,000 = $48,000 - $30,000 + $9,000 - $15,000 + Stockholders' Equity 
Stockholders' Equity = $51,000

The change in stockholders' equity = Ending stockholders' equity - Beginning stockholders' equity 
Change in stockholders' equity = $51,000 - $45,000 
Change in stockholders' equity = $6,000

Therefore, the stockholders' equity changed by $12,000 from the beginning of the year to the end of the year.

Stahl Consulting Started the Year with Total Assets of $60,000