Elston company compiled the following information as of december 31, 2014: service revenue $700,000common stock $150,000equipment $200,000operating expenses $625,000cash $175,000dividends $50,000supplies $25,000accounts payable $100,000accounts receivable $75,000retained earnings, jan 1, 2014 $375,000elston's stockholders' equity on december 31, 2014 is

The Elston's stockholders' equity on December 31, 2014 is $550,000

Explanation:

For computing the stockholder equity, first, we have to find out the ending retained earning balance which equals to

= Beginning retained earning balance + Net income - dividend paid

= $375,000 + $75,000 - $50,000

= $400,000

where,

Net income = Service revenue - operating expenses

                   = $700,000 - $625,000

                   = $75,000

Now the stockholder equity equals to

= Common stock + ending balance of retained earning

= $150,000 + $400,000

= $550,000