23 June, 15:43

# Al's Automotive started the year with total assets of \$250,000 and total liabilities of \$180,000. During the year the business recorded \$375,000 in revenues, \$200,000 in expenses, and dividends of \$35,000. Stockholders' equity at the end of the year wasA : \$210,000B : \$455,000C : \$270,000D : \$520,000

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1. 23 June, 16:33
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Option A \$210,000

Explanation:

As we know that:

Closing Equity = Opening balance + (Revenues - Expenses - Dividends)

To find closing equity we have to find opening equity and the opening balance is the difference of opening assets and opening liabilities so:

Opening Total Equity = Opening Total Assets - Opening Total Liabilities

Putting values we have:

Opening Equity = \$250,000 Op. Assets + \$180,000 Op. Liabilities

= \$70,000 Opening Equity

So putting the value of opening equity we have:

Closing Equity = \$70,000 Opening Equity + (\$375,000 Revenue - \$200,000 Expenses - \$35,000 Dividends)

= \$70,000 + 140,000 Retained Earnings = \$210,000 Closing Equity

So the option A is correct.