At the end of the accounting period, Houston Company had $7,200 of common stock, paid-in capital in excess of par value-common of $9,100, retained earnings of $8,000, and $5,000 of treasury stock. What is the total amount of stockholders' equity?

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Business

Aubree

1 July, 10:18

At the end of the accounting period, Houston Company had $7,200 of common stock, paid-in capital in excess of par value-common of $9,100, retained earnings of $8,000, and $5,000 of treasury stock. What is the total amount of stockholders' equity?

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Sarah May · Answer 1

The total amount of stockholders equity is 19,300

Explanation:

In order to find the total amount of stockholders equity we will add the common stock and paid in capital in excess of par value and then add retained earnings to it. We will then subtract treasury stock from it in order to find the total amount of stock holders equity. The reason for this is that the common stock and paid in capital in excess is the contributed capital that the shareholders have provided to the company and is part of their equity and retained earnings are the money that the company has made so that is also part of the equity of shareholders. We subtract the treasury stock because it is a contra equity account and it reduces shareholders equity by the amount paid for the stock.

Common Stock = 7,200

Paid in capital in excess = 9,100

Retained earnings = 8,000

Treasury Stock = 5,000

7,200+9,100+8,000-5,000=19,300