Question

What is the total stockholders' equity based on the following account balances? Common Stock $500,000 Paid-In Capital in Excess of Par—Common Stock 50,000 Retained Earnings 190,000 Treasury Stock 40,000 a.$630,000 b.$700,000 c.$740,000 d.$780,000

Answer 1

Answer:

b.$700,000

Explanation:

The total stockholders' equity shall be determined thorugh the following mentioned formula:

Stockholders' equity=Common Stock+Paid-In Capital in Excess of Par+Retained Earnings-Treasury Stock

In this question

Common Stock=$500,000

Paid-In Capital in Excess of Par=$50,000

Retained Earnings=$190,000

Treasury Stock=$40,000

Stockholders' equity=$500,000+$50,000 +$190,000-$40,000

                                  =$700,000

So based on the above calculations, the answer shall be b.$700,000