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28 December, 18:36

During 2013, its first year of operations, Neko's Bakery had revenues of $60,000 and expenses of $33,000. The business paid dividends of $22,000. What is the amount of stockholders' equity at December 31, 2014?

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  1. 28 December, 18:47
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    The stakeholders' equity is $5,000

    Explanation:

    The stakeholders' equity is the total asset available to shareholders after all liabilities and debts have been paid off.

    The formula for calculating stakeholders' equity is given as:

    Stakeholders' equity = Total assets - Total liabilities

    To calculate this, we have to group the transactions into assets and liabilities:

    Assets:

    Revenues = $60,000 (Total assets)

    Liabilities:

    Expenses = $33,000

    Dividends paid = $22,000

    Total Liabilities = $55,000

    Therefore:

    Stakeholders' equity = 60,000 - 55,000 = $5,000
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