Question

Jackson Health Foods has 8,000 shares of $2 par common stock outstanding, which was issued at $15 per share. Jackson also has a deficit balance in Retained Earnings of $86,000. How much is Jackson's total stockholders' equity?

Answer 1

Retained earnings - $86000

Add : Common Stock $16,000

Share premium (15-2) x 8000 = 13 x 8000 = $104,000

Jackson's total Stakeholders equity $34,000

Step-by-step explanation:

A share premium account is to be reported in the shareholders’ equity area of the statement of financial position. The share premium account is the difference between the par value of the shares issued and the actual issue price. the share premium is also referred to additional paid in capital. we arrive at our answer by deducting the negative retained earnings from the value of the shares issued. it is clear that the shares are issued at a premium