Question

Techstar, Inc. has 15,000 shares of $1 par common stock outstanding which it issued at $5 per share. Techstar, Inc. also has retained earnings of $100,000. How much is Techstar, Inc.’s total stockholders’ equity?

Answer 1

Techstar, Inc.’s total stockholders’ equity is $175,000

Step-by-step explanation:

Total equity is the total value of all paid-in-capital balance and accumulated earning and any other reserves. Stocks are issued on a price which includes the price at par value and price over par value, both of these are recorded separately.

Number of shares issued = 15,000 shares

Issuance Price = $5

Par value = $1

Equity Section of Balance sheet

Paid-In-Capital at par ($1 x 15000) $15,000

Paid-In-Capital excess of par (($5-$1) x 15,000) $60,000

Retained earning $100,000

Total Stockholder's Equity $175,000