Accounting Problem
 

Cant figure out this accounting problem and its driving me insane.

compute the missing amount (?) for the company (adapted and in billions).

FedEx Corporation:
BEGINNING
Assets..........$12
Liabilities......7

ENDING
Assets..........$13
Liabilities..... 7

OWNERS EQUITY
Issuance of stock......$?
Dividends.......1

INCOME STATEMENT
Revenues........$20
Expenses........19

I'm supposed to use this formula: Assets = Liabilities + Owners Equity.

The book says the missing value is 1. How can this be?

Re: Accounting Problem
 

I assume that the net income of $1 was paid out as the dividend during the period (assumes the dividends were zero at the beginning).

The net increase in assets over liabilities from beginning to ending period (that is $1)must have come from the issuance of stock then. This assumes the beginning balance for the issuance of stock (this has to be additional stock issued during the period) was zero.

Re: Accounting Problem
 

p.s. Are you sure they aren’t asking for the cash flow here? That is, the increase in owners equity is $1

I can see why you are having trouble. You don’t know the beginning owners equity.

The owners equity at the beginning of the period must have been $5. It is now + the $1 you are talking about.