The following information is provided for Sacks Company before closing entries.

 The following information is provided for Sacks Company before closing entries.

 What is the amount of total shareholders’ equity?

Answer

$78,500

Explanation

Total shareholders' equity includes common stock plus (ending) retained earnings. Common stock is $68,000. Ending retained earnings = beginning retained earnings ($8,000) plus revenues ($30,000) less expenses ($24,500) less dividends ($3,000) = $10,500.
Total shareholders' equity = $68,000 + $10,500 = $78,500. Alternatively, total stockholders’ equity = total assets ($83,500) – total liabilities ($5,000).

 

Thanks