Scribd
Upload
132 views

Accounting Pratice Question

The document provides information about Magee's total assets, liabilities, and equity from December 31, 20X1 to December 31, 20X2. It then analyzes how the $100,000 increase in equity could be explained under different scenarios involving dividends paid and additional stock issuances, concluding that Magee had a net loss of $50,000 when it paid $100,000 in dividends and raised $250,000 from stock issuances.

Uploaded by

chacha_420
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
132 views

Accounting Pratice Question

The document provides information about Magee's total assets, liabilities, and equity from December 31, 20X1 to December 31, 20X2. It then analyzes how the $100,000 increase in equity could be explained under different scenarios involving dividends paid and additional stock issuances, concluding that Magee had a net loss of $50,000 when it paid $100,000 in dividends and raised $250,000 from stock issuances.

Uploaded by

chacha_420
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 1

Solution to Quiz no.

Total Assets
Total Liabilities
Total Equity
Ending equity
Beginning equity
Change in equity
(a)

Dec. 31, 20X1


$1,500,000
700,000
$ 800,000

Dec. 31, 20X2


$2,300,000
1,400,000
$ 900,000
$ 900,000
800,000
$ 100,000

Magee paid no dividends, and no additional capital was raised via share
issuances.

Because there were no dividends and no issues of stock, the $100,000 increase in equity is
all attributable to net income.
$800,000 + $0 for stock issuances - $0 for dividends + net income ($100,000) = $900,000

(b)

Magee paid $100,000 in dividends, and no additional capital was raised via
share issuances.

Because there were $100,000 in dividends and no issues of stock, the $100,000 increase in
equity would require a $200,000 net income.
$800,000 + $0 for stock issuances - $100,000 for dividends + net income ($200,000) = $900,000

(c)

Magee paid no dividends, but raised $250,000 via issuances of additional


shares of stock.

Because there were no dividends, but $250,000 of stock issuances, Magee had a net loss
of $150,000.
$800,000 + $250,000 for stock issuances - $0 for dividends + net income (-$150,000) = $900,000

(d)

Magee paid $100,000 in dividends, and raised $250,000 via issuances of


additional shares of stock.

Because there were $100,000 in dividends, and $250,000 of stock issuances, Magee had a
net loss of $50,000.
$800,000 + $250,000 for stock - $100,000 for dividends + net income (-$50,000) = $900,000

You might also like