Use the Accounting Equation to Answer Each of the Independent

question 201

Essay

Use the accounting equation to answer each of the independent questions below.

(a) At the beginning of the year, Norton Company's assets were $75,000 and its stockholders' equity was $38,000. During the year, assets increased by $18,000 and liabilities increased by $4,000. What was the stockholders' equity at the end of the year?

(b) At the beginning of the year, Turpin Industries had liabilities of $44,000 and stockholders' equity of $66,000. If assets increased by $10,000 and liabilities decreased by $5,000, what was the stockholders' equity at the end of the year?

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Definitions:

Non-Eligible Dividends

Dividends that are paid out by a company from earnings that have not been taxed at the general corporate tax rate.

Average Tax Rate

The percentage of total income that is paid in taxes, calculated by dividing the total amount of taxes paid by total income.

Capital Gains

The profit realized from the sale of assets or investments that have increased in value over their purchase price.

Non-Eligible Dividends

Dividends that do not qualify for the enhanced dividend tax credit in certain jurisdictions, often associated with smaller businesses.