Metropolitan Casting Services started the year with total assets of $130,000 and total liabilities of $45,000. The revenues and the expenses for the year amounted to $130,000 and $50,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $60,000. Calculate the amount of increase or decrease in stockholders' equity for the year.
A) a $20,000 increase
B) a $105,000 increase
C) a $85,000 decrease
D) a $60,000 increase

Question

Quizplus · Accepted Answer

The increase in stockholders' equity is calculated as: Net Income - Dividends. Net Income = Revenues - Expenses = $130,000 - $50,000 = $80,000. Stockholders' equity change = $80,000 (Net Income) - $60,000 (Dividends) = $20,000 increase.

Metropolitan Casting Services Started the Year with Total Assets of $130,000