Asked by Bailey Ennis on Jun 11, 2024
Verified
Cragmont has beginning equity of $277,000,net income of $63,000,dividends of $25,000 and no additional investments by stockholders during the period.Its ending equity is:
A) $365,000.
B) $239,000.
C) $189,000.
D) $315,000.
E) $277,000.
Ending Equity
The value of an owner's interest in a company at the end of an accounting period, calculated as total assets minus total liabilities.
Net Income
Refers to the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.
Dividends
Dividends are the portion of profit a company decides to distribute to its shareholders, often on a regular basis.
- Recognize the elements influencing shareholder equity, such as stockholder investments, net earnings, and dividend payouts.
Verified Answer
Ending Equity = Beginning Equity + Net Income - Dividends
Substituting the given values:
Ending Equity = $277,000 + $63,000 - $25,000 = $315,000
Therefore, the correct answer is D) $315,000.
Learning Objectives
- Recognize the elements influencing shareholder equity, such as stockholder investments, net earnings, and dividend payouts.
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