Question

2. Star Nursery started 2018 with total assets of $24,000 and total liabilities of $5,000. At the end of 2018, Star Nursery's total assets stood at $31,000 and total liabilities were $8,000. Requirements 1. Did the stockholders' equity of Star Nursery increase or decrease during 2018? By how much? 2. Identify the four possible reasons that stockholders' equity can change. Requirement 1. Did the stockholders' equity of Star Nursery increase or decrease during 2018? By how much? The stockholders' equity (1) during the year by $ . Requirement 2. Identify the four possible reasons that stockholders' equity can change. Stockholders' equity can increase through: (2) - - andior (3) _. Stockholders' equity can decrease through (4) – and/or (5) (1) O O Increased decreased (2) O borrowing money O dividend payrrient issuance of common stock Onet loss O O O paying a liability purchasing assets for cash purchasing assets on account (3) O borrowing money O dividend payment Onet income O net loss O paying a liability o purchasing assets for cash O purchasing assets on account (4) O borrowing money O dividend payment issuance of common stock O net income O paying a liability O purchasing assets for cash O purchasing assets on account O (5) O borrowing money issuance of common stock O net income O net loss paying a liability purchasing assets for cash purchasing assets on account O

Answer 1

Using accounting equation, Assets = Liabilities + Stockholders equity Stockholders equity at the start of the year = (24000-5000) Stockholders equity at the start of the year - $ 19,000/- Stockholders equity at the end of the year - (31000-8000) Stockholders equity at the end of the year = $ 23,000/- So Stockholders equity Increased by $ 4,000/. 1) Increased 2) Issuance of common stock 3) Net Income 4) Dividend Payment 5) Net loss