On January 1 of the current year, Jimmy's Sandwich Company, Inc. reported stockholders' equity totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year the business paid $20,000 to the stockholders. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in stockholders' equity during the year was:
A)A decrease of $9,500.
B)An increase of $9,500.
C)An increase of $30,500.
D)A decrease of $30,500.
E)An increase of $73,500.

Question

Quizplus · Accepted Answer

The change in stockholders' equity is calculated as: Net Income - Dividends. Net Income = Revenues - Expenses = $96,000 - $85,500 = $10,500. Change in equity = $10,500 - $20,000 = -$9,500 (a decrease).

On January 1 of the Current Year, Jimmy's Sandwich Company