If paid-in capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000
(deficit), total stockholders' equity is $880,000.

Question

If paid-in capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 
(deficit), total stockholders' equity is $880,000.

Quizplus · Accepted Answer

Total stockholders' equity is calculated by adding together the preferred stock, common stock, paid-in capital in excess of par for both preferred and common stock, and retained earnings. In this case, it would be $200,000 (preferred stock) + $525,000 (common stock) + $30,000 (paid-in capital in excess of par/preferred stock) + $20,000 (paid-in capital in excess of par/common stock) + $105,000 (retained earnings) = $880,000. However, since the retained earnings are described as a deficit, it should actually be subtracted, not added. Therefore, the correct total stockholders' equity would be $200,000 + $525,000 + $30,000 + $20,000 - $105,000 = $670,000.

If Paid-In Capital in Excess of Par/preferred Stock Is $30,000