The Following Balance Sheet Information Is Provided A) What Is the Amount of Shareholders' Equity at January

question 106

Essay

The following balance sheet information is provided:
$\begin{array}{lr}&&&\text { Shareholder's }\\ &\text { Assets}&\text { Liabilities}&\text { Equity}\\\text { January 1, Year 1 } & \$ 1,500,000&\$540,000&\$\underline{\quad\quad} \\\text { December 31. Year 1 } & 1,810,000&\underline{\quad\quad}&1,400,000\end{array}$
A) What is the amount of shareholders' equity at January 1. Year 1?
B) What is the amount of liabilities at December 31, Year 1?
C) Assume that the company paid dividends of $620,000 during the year. How much net income did it earn during the year?

D) Assume that the company paid no dividends during the year. Without looking at the income statement how can you tell if the company is profitable or not?

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Definitions:

Production Increase

refers to a rise in the quantity of goods or services produced over a specific period.

Interdependent

The mutual reliance between two or more entities, where changes in one affect the others.

Perfect Competitors

Refers to businesses in a market structure where they sell homogenous products, face no barriers to entry or exit, and none of them can influence the market price.

Smaller Output

Production of fewer goods or services, often indicating a reduction in manufacturing or business activity levels.