| Assets = Liabilities + Owner’s Equity
Following that basic equation you will arrive at your answer.
EXAMPLE:
Beg assets and liabs – 10,000 and 5,000
End assets and liabs – 12,000 and 4,000
Revenues 9,000
Expenses 6,000
Dividends 1,000
So, what do we know from the above information?
During the years, assets rose by 2,000 and liabilities decreased by 1,000
There was also a Net Income of 3,000 and Dividends paid of 1,000
We also know that Owner’s Equity HAD to be 5,000 (10,000-5,000) at the beg of the year and 8,000 (12,000 – 4,000) at the end of the year.
Therefore…
We must reconcile Equity.
Beg 5,000
Net Income + 3,000
Less Dividend – 1,000
End 8,000
From the above, 5,000 + 3,000 – 1,000 = 7,000. But we know the end must be 8,000
Therefore, we issued 1,000 in capital stock. | 
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