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Plumbers-on-the-Go Ltd. started the year with total assets of $120,000 and total liabilities of $75,000. During the year, the business recorded $82,000 in service revenues, $45,000 in expenses, and paid dividends of $2,500.
-Shareholders' equity at the end of the year was
A) $79,500.
B) $45,000.
C) $82,000.
D) $77,000.

Question

Quizplus · Accepted Answer

Shareholders' equity at the beginning of the year was $45,000 ($120,000 - $75,000). During the year, net income was $37,000 ($82,000 - $45,000), and dividends paid were $2,500. Therefore, shareholders' equity at the end of the year is $79,500 ($45,000 + $37,000 - $2,500).

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