If Wren Co. started the year with $50,000 in assets and $30,000 in liabilities, then it recorded $90,000 in revenues, $60,000 in expenses, and dividends of $10,000, what would Stockholders' Equity be at the end of the year?

Question

Business

Adriel Hatfield

22 September, 21:23

If Wren Co. started the year with $50,000 in assets and $30,000 in liabilities, then it recorded $90,000 in revenues, $60,000 in expenses, and dividends of $10,000, what would Stockholders' Equity be at the end of the year?

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Brennen Wallace · Answer 1

Value of Stockholder's equity at year end = $40,000

Explanation:

As with every transaction the standard statement

"Assets = Equity + Liability" remains constant.

As when the business was started,

Assets = $50,000, Liabilities = $30,000

Thus, Equity = $50,000 - $30,000 = $20,000

During the year net revenue earned = $90,000 - $60,000 - $10,000 = $20,000

This net revenue will increase equity at the end of year.

As Opening equity + increase in current year = $20,000 + $20,000 = $40,000 = Value of Equity at Year end.