Question

The following data comes from the balance sheet of the Stratosphere Corporation on May 31 of a certain year:

Common stock $26,250

Treasury stock ($11,097,450)

Retained earnings $27,043,590

Total liabilities $15,368,850

Paid-in capital $4,054,050

Based on the available information, the total stockholders' equity is estimated at:

Answer 1

The total stockholders' equity for Stratosphere Corporation is calculated by adding common stock, paid-in capital, and retained earnings and then subtracting treasury stock, which results in $20,026,440.

Step-by-step explanation:

To calculate the total stockholders' equity for Stratosphere Corporation, we need to consider the common stock, paid-in capital, treasury stock, and retained earnings. The total stockholders' equity is the sum of these items, but remember that treasury stock is a contra equity account, and it reduces the total equity.

The calculation is as follows:

1. Common stock: $26,250
2. Paid-in capital: $4,054,050
3. Retained earnings: $27,043,590
4. Treasury stock: ($11,097,450) (It's negative because treasury stock decreases equity)

Add Common stock, Paid-in capital, and Retained earnings and then subtract the Treasury stock:

$26,250 + $4,054,050 + $27,043,590 - $11,097,450 = $20,026,440

Therefore, the estimated total stockholders' equity is $20,026,440.