Solution to Quiz no.

Total Assets
Total Liabilities
Total Equity
Ending equity
Beginning equity
Change in equity
(a)

Dec. 31, 20X1

$1,500,000
700,000
$ 800,000

Dec. 31, 20X2

$2,300,000
1,400,000
$ 900,000
$ 900,000
800,000
$ 100,000

Magee paid no dividends, and no additional capital was raised via share
issuances.

Because there were no dividends and no issues of stock, the $100,000 increase in equity is
all attributable to net income.
$800,000 + $0 for stock issuances - $0 for dividends + net income ($100,000) = $900,000

(b)

Magee paid $100,000 in dividends, and no additional capital was raised via
share issuances.

Because there were $100,000 in dividends and no issues of stock, the $100,000 increase in
equity would require a $200,000 net income.
$800,000 + $0 for stock issuances - $100,000 for dividends + net income ($200,000) = $900,000

(c)

Magee paid no dividends, but raised $250,000 via issuances of additional

shares of stock.

Because there were no dividends, but $250,000 of stock issuances, Magee had a net loss
of $150,000.
$800,000 + $250,000 for stock issuances - $0 for dividends + net income (-$150,000) = $900,000

(d)

Magee paid $100,000 in dividends, and raised $250,000 via issuances of

additional shares of stock.

Because there were $100,000 in dividends, and $250,000 of stock issuances, Magee had a
net loss of $50,000.
$800,000 + $250,000 for stock - $100,000 for dividends + net income (-$50,000) = $900,000