Moody Company has the following information available for the most current year:
$\begin{array} { l }
\text {Paid-in capital, January 1, 2014 }&\$ 475,000\
\text {Retained earnings, January 1, 2014 }&\$100,000 \
\text { Total revenues in 2014}&\$ 870,000\
\text {Total expenses in 2014 }&\$550,000 \
\text {Dividend declared in 2014 }&\$70,000 \
\text {Dividend paid in 2014 }&\$ 0\
\text {Investments by owners in 2014 }&\$10,000 \
\end{array}$

What was the total amount of stockholders' equity for Moody Company at December 31,2014?
A) $250,000
B) $350,000
C) $485,000
D) $835,000

Question

Moody Company has the following information available for the most current year:
$\begin{array} { l  }
 \text {Paid-in capital, January 1, 2014 }&\$ 475,000\
 \text {Retained earnings, January 1, 2014 }&\$100,000 \
 \text { Total revenues in 2014}&\$ 870,000\
 \text {Total expenses in 2014 }&\$550,000 \
 \text {Dividend declared in 2014 }&\$70,000 \
 \text {Dividend paid in 2014  }&\$ 0\
 \text {Investments by owners in 2014 }&\$10,000 \
\end{array}$

What was the total amount of stockholders' equity for Moody Company at December 31,2014?
A) $250,000
B) $350,000
C) $485,000
D) $835,000

Quizplus · Accepted Answer

Stockholders' equity at December 31, 2014, is calculated by adding the beginning paid-in capital, investments by owners, and retained earnings (beginning retained earnings + net income - dividends declared). Net income is revenues minus expenses. So, $ \$475,000 + \$10,000 + (\$100,000 + (\$870,000 - \$550,000) - \$70,000) = \$835,000$.

Moody Company Has the Following Information Available for the Most