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At the beginning of the fiscal year, the balance sheet showed assets of $2,728 and stockholders' equity of $1,672. During the year, assets increased $148 and liabilities decreased $76.Stockholders' equity at the end of the year totaled:Multiple Choice$1,896.$1,744.$2,876.$1,672.

Question

At the beginning of the fiscal year, the balance sheet showed assets of 2,728andstockholdersequityof2,728 and stockholders' equity of 1,672. During the year, assets increased 148andliabilitiesdecreased148 and liabilities decreased 76.Stockholders' equity at the end of the year totaled:Multiple Choice1,896.1,896.1,744.2,876.2,876.1,672.

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Solution

The formula for the balance sheet is: Assets = Liabilities + Stockholders' Equity.

At the beginning of the year, we know that Assets = 2,728andStockholdersEquity=2,728 and Stockholders' Equity = 1,672. We can use these to find the Liabilities at the beginning of the year:

2,728(Assets)=Liabilities+2,728 (Assets) = Liabilities + 1,672 (Stockholders' Equity)

So, Liabilities = 2,7282,728 - 1,672 = $1,056.

During the year, assets increased by 148andliabilitiesdecreasedby148 and liabilities decreased by 76. So, the values at the end of the year are:

Assets = 2,728+2,728 + 148 = 2,876.Liabilities=2,876. Liabilities = 1,056 - 76=76 = 980.

We can now find the Stockholders' Equity at the end of the year:

2,876(Assets)=2,876 (Assets) = 980 (Liabilities) + Stockholders' Equity

So, Stockholders' Equity = 2,8762,876 - 980 = $1,896.

Therefore, the Stockholders' Equity at the end of the year totaled $1,896.

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