On January 1 of the current year, Jimmy's Sandwich Company, Inc. reported stockholders' equity totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year the business paid $20,000 to the stockholders. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in stockholders' equity during the year was: a) A decrease of $9,500.
b) An increase of $9,500.
c) An increase of $30,500.
d) A decrease of $30,500.
e) An increase of 73,500.

A.nswer:

a) A decrease of $9,500.

Explanation:

Calculation for the change in total stockholders' equity

Using this formula

Change in total stockholders' equity = Total Revenues amount - Total Expenses amount - Dividends amount

Let plug in the formula

Change in total stockholders' equity =$96,000 - $85,500 - $20,000

Change in total stockholders' equity = Decrease of $9,500

Therefore the change in total stockholders' equity during the year was: a decrease of $9,500

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.