Questions: d. Stockholders' equity as of May 31, 20Y3, assuming that assets increased by 113,100 and liabilities e. Net income (or net loss) during 20Y3, assuming that as of May 31, 20Y3, assets were 1,079,630, liabilities were 175,650, and no additional common stock was issued or dividend

d. Stockholders' equity as of May 31, 20Y3, assuming that assets increased by 113,100 and liabilities

e. Net income (or net loss) during 20Y3, assuming that as of May 31, 20Y3, assets were 1,079,630, liabilities were 175,650, and no additional common stock was issued or dividend

Transcript text: d. Stockholders' equity as of May 31, 20Y3, assuming that assets increased by $113,100 and liabilities e. Net income (or net loss) during 20Y3, assuming that as of May 31, 20Y3, assets were $1,079,630, liabilities were $175,650, and no additional common stock was issued or dividend

Solution

Solution Steps

Solution Approach

d. To find the stockholders' equity as of May 31, 20Y3, we need to use the accounting equation: $\text{Assets} = \text{Liabilities} + \text{Stockholders' Equity}$ Given the increase in assets and liabilities, we can rearrange the equation to solve for stockholders' equity.

e. To find the net income (or net loss) during 20Y3, we need to use the change in stockholders' equity. The formula for stockholders' equity is: $\text{Stockholders' Equity} = \text{Assets} - \text{Liabilities}$ We can then compare the stockholders' equity at the beginning and end of the period to determine the net income or net loss, considering no additional common stock was issued or dividends paid.

Step 1: Calculate Final Stockholders' Equity

To find the stockholders' equity as of May 31, 20Y3, we use the accounting equation: $\text{Assets} = \text{Liabilities} + \text{Stockholders' Equity}$

Given:

Final assets: $\$1,079,630$
Final liabilities: $\$175,650$

Rearranging the equation to solve for stockholders' equity: $\text{Stockholders' Equity} = \text{Assets} - \text{Liabilities}$ $\text{Stockholders' Equity} = 1,079,630 - 175,650$ $\text{Stockholders' Equity} = 903,980$

Step 2: Calculate Initial Stockholders' Equity

Given:

Initial assets: $\$966,530$
Initial liabilities: $\$0$ (assuming initial liabilities are not given)

Using the same accounting equation: $\text{Stockholders' Equity} = \text{Assets} - \text{Liabilities}$ $\text{Stockholders' Equity} = 966,530 - 0$ $\text{Stockholders' Equity} = 966,530$

Step 3: Calculate Net Income (or Net Loss)

To find the net income (or net loss) during 20Y3, we compare the stockholders' equity at the beginning and end of the period. Given that no additional common stock was issued or dividends paid, the change in stockholders' equity represents the net income (or net loss).

$\text{Net Income (or Net Loss)} = \text{Final Stockholders' Equity} - \text{Initial Stockholders' Equity}$ $\text{Net Income (or Net Loss)} = 903,980 - 966,530$ $\text{Net Income (or Net Loss)} = -62,550$