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29 April, 20:24

Torres Travel's stockholders' equity at the beginning of March 2017 was $200,000. During the month, the company earned net income of $50,000 and paid dividends of $10,000. At the end of March 2017, what is the amount of stockholders' equity? A : $240,000 B : $260,000 C : $150,000 D : $200,000

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  1. 29 April, 22:34
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    A : $240,000

    Explanation:

    Provided information, we have

    Opening stockholder's Equity = $200,000

    Net income earned during the month = $50,000

    Dividends paid during the month = $10,000

    Stockholder's Equity = Common Stock + Retained Earnings

    Retained Earnings = Net income - Dividend

    = $50,000 - $10,000 = $40,000

    Therefore, Stockholder's Equity at month end = $200,000 + $40,000 = $240,000

    Correct option is

    A : $240,000
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