Question

Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $10,000 in expenses. Stahl issued stock of $3,000 and paid dividends of $5,000 during the year. Stockholders' equity changed by what amount from the beginning of the year to the end of the year?Select one:A. $3,000.B. $1,000.C. $15,000.D. $4,000.

Answer 1

D. $4,000.

The Stockholders' equity increase by two items, one is the issued stock of $3,000 that increase equity and cash in assets part, and the result before dividends of $1,000 that increase retained earnings in the equity part and cash in the assets part.

The Net income of the year was $6,000 but were paid in dividends -$5,000, so the retained earnings is $1,000

Step-by-step explanation:

START END

TOTAL ASSETS $20,000 $24,000

TOTAL LIABILITIES $5,000 $5,000

Common Stock $3,000

Retained Earnings $1,000

Capital $15,000 $15,000

TOTAL EQUITY $15,000 $19,000

Income Statement

Sales $16,000

Cost of goods sold -$10,000

Gross Profit $6,000

Dividends -$5,000

$1,000