Chocolate Heaven, Inc. had a balance of $200,000 in shareholders’ equity at 31 December 20X6. During 20X7, the company recorded a net profit of $50,000, distributed dividends of $30,000, and borrowed $10,000. What was the company’s shareholders’ equity at 31 December 20X7?Question 5Select one:a.$200,000b.$210,000c.$220,000d.$230,000

The calculation of the shareholders' equity at the end of 20X7 is as follows:

1. Start with the initial shareholders' equity at the end of 20X6, which is $200,000.
2. Add the net profit for 20X7. The net profit is the amount of money the company earned after all expenses and taxes. In this case, it's $50,000. So,$200,000 + $50,000 =$250,000.
3. Subtract the dividends distributed in 20X7. Dividends are a portion of a company's earnings that are paid out to shareholders. In this case, it's $30,000. So,$250,000 - $30,000 =$220,000.
4. The borrowed amount of $10,000 does not affect the shareholders' equity because it's a liability, not equity.

So, the shareholders' equity at the end of 20X7 is $220,000. Therefore, the correct answer is c.$220,000.

The shareholders' equity of a company is calculated by adding the net profit to the initial equity and subtracting any dividends. The borrowed amount does not affect the shareholders' equity as it is a liability, not equity.

Here's how you calculate it:

1. Start with the initial equity at the end of 20X6, which is $200,000.
2. Add the net profit made during 20X7, which is $50,000. This gives you$250,000.
3. Subtract the dividends distributed during 20X7, which is $30,000. This gives you$220,000.

So, the shareholders' equity at the end of 20X7 is $220,000. Therefore, the correct answer is c.$220,000.

The calculation of the company's shareholders' equity at 31 December 20X7 is as follows:

1. Start with the initial shareholders' equity at 31 December 20X6, which is $200,000.

2. Add the net profit for 20X7. The net profit is the amount of money the company earned after all expenses and taxes. In this case, the net profit is $50,000. So,$200,000 + $50,000 =$250,000.

3. Subtract the dividends distributed in 20X7. Dividends are a portion of a company's earnings that are paid out to shareholders. In this case, the dividends are $30,000. So,$250,000 - $30,000 =$220,000.

4. The borrowed amount of $10,000 does not affect the shareholders' equity. This is because borrowing increases both the company's assets (cash) and its liabilities (loan payable), leaving shareholders' equity unchanged.

So, the company's shareholders' equity at 31 December 20X7 is $220,000. Therefore, the correct answer is c.$220,000.