Ken’s Canaries shows the following balances in the books:
Common Stock $200,000
Paid in Capital
in Excess of Par $20,000
Retained Earnings $95,000
Treasury Stock $10,000
What is the total stockholder’s equity?
Explanation
Answer - C - The total stockholder’s equity is $305,000:
Common Stock: 200,000 +
Paid in Capital
In Excess of Par 20,000 +
Ret. Earnings 95,000
Total 315,000
Less
Treasury Stock 10,000
Total 305,000
Key Takeaway: Stockholder’s Equity is the sum of Common Stock, Paid-in Capital in Excess of Par, and Retained Earnings, less Treasury Stock. Treasury stock is subtracted from the total because treasury stock is stock that has been purchased back by the Corporation, but it has not been retired.
