The beginning-of-the-year total owner's equity for a firm was $40,000. During the year, the firm issued common stock for a total proceeds of $20,000, earned $10,000 net income, and paid $5,000 in cash dividends. If ending total liabilities are $100,000, what is ending total assets?
A) $165,000
B) $75,000
C) $35,000
D) $100,000

Question

Quizplus · Accepted Answer

The ending total owner's equity can be calculated as beginning equity + net income + issued stock - dividends = $40,000 + $10,000 + $20,000 - $5,000 = $65,000. Using the accounting equation (Assets = Liabilities + Owner's Equity), ending total assets = $100,000 (liabilities) + $65,000 (owner's equity) = $165,000.

The Beginning-Of-The-Year Total Owner's Equity for a Firm Was $40,000