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Assets totaled $24,250 and liabilities totaled $8,500 at the beginning of the year
Assets totaled $24,250 and liabilities totaled $8,500 at the beginning of the year. During the year, assets decreased by $3,500 and liabilities increased by $2,800.
Use the information above to answer the following question.
What is the amount of the change in stockholders' equity during the year?
Expert Solution
Answer: $6,300 decrease in stockholders' equity during the year
Explanation:
Change in stockholders' equity during the year is calculated as:
Beginning stockholders' equity - Ending stockholders' equity
$15,750 - $9,450 = $6,300 Decrease
Stockholder's equity at the end of the year is calculated as:
Assets - Liabilities = Stockholder's Equity
$20,750 - $11,300 = $9,450
Liabilities at the end of the year is calculated as:
$8,500 + $2,800 = $11,300
Assets at the end of the year is calculated as:
$24,250 - $3,500 = $20,750
Stockholders' equity at the beginning of the year is calculated as:
Assets - Liabilities = Stockholder's Equity
$24,250 - $8,500 = $15,750
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