A company's financial records at the end of the year included the following amounts: $\begin{array}{lr}
\text { Cash } & \$ 70,000 \
\text { Accounts Receivable } & 28,000 \
\text { Supplies } & 4,000 \
\text { Accounts Payable } & 10,000 \
\text { Notes Payable } & 5,000 \
\text { Retained Earnings, beginning of year } & 17,000 \
\text { Common Stock } & 40,000 \
\text { Service Revenue } & 53,000 \
\text { Wages Expense } & 8,000 \
\text { Advertising Expense } & 5,000 \
\text { Rent Expense } & 10,000
\end{array}$ What is the amount of total stockholders' equity that would be reported on the Balance Sheet at the end of the year?

Question

Quizplus · Accepted Answer

To calculate the total stockholders' equity at the end of the year, we need to consider the beginning retained earnings, net income (or loss), and any contributions or distributions to/from owners. First, calculate the net income: Service Revenue ($53,000) minus the sum of Wages Expense ($8,000), Advertising Expense ($5,000), and Rent Expense ($10,000) equals $30,000. Add this to the beginning retained earnings of $17,000 to get $47,000 in retained earnings at the end of the year. Then, add the common stock amount of $40,000 to the retained earnings of $47,000 to get a total stockholders' equity of $87,000.

A Company's Financial Records at the End of the Year