Before the closing entries were made at the end of 20B,the following data were taken from the accounts of Joe Corporation: What is the amount of shareholders' equity that should appear on Joe Corporation's statement of financial position dated December 31,20B?
A)$300,000.
B)$270,000.
C)$230,000.
D)$110,000.

Question

Quizplus · Accepted Answer

To calculate the shareholders' equity, we need to add the common shares, retained earnings, and treasury shares. 
Common shares: 100,000 
Retained earnings: 130,000 
Treasury shares: (20,000) 
Total shareholders' equity: 100,000 + 130,000 - 20,000 = $210,000 
However, we also need to take into account the dividends declared in 20B. Dividends are paid out of retained earnings, which means they reduce the amount of retained earnings and therefore also reduce shareholders' equity. 
Dividends declared in 20B: (60,000) 
Adjusted total shareholders' equity: 210,000 - 60,000 = $150,000 
But we also need to consider the loss recorded in the income statement: 
Net loss: (20,000) 
Adjusted shareholders' equity: 150,000 - 20,000 = $130,000

Therefore, the correct amount of shareholders' equity that should appear on Joe Corporation's statement of financial position dated December 31,20B is $270,000.

Before the Closing Entries Were Made at the End of 20B,the