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Stockholders Equity and Paid-In Capital for Edis Corporation

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Presented below is information related to Edis Corporation:

Common Stock, $1 par $4,300,000
Paid-in Capital in Excess of Par?Common Stock 550,000
Preferred 8 1/2% Stock, $50 par 2,000,000
Paid-in Capital in Excess of Par?Preferred Stock 400,000
Retained Earnings 1,500,000
Treasury Common Stock (at cost) 150,000

1. What is the total stockholders' equity?
2. What is the total paid-in capital (cash collected) related to the common stock?

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Solution Summary

The solution explains the stockholders' equity, the treasury stock component and the components of paid in capital as it relates to cash collected.

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1. Stockholders' equity would total to (4,300,000 + 550,000 + 2,000,000 + 400,000 + 1,500,000 - 150,000) = 8,600,000.

Only the treasury stock is a negative amount in the equity section because it is represents a reduction of capital. Why? Because assets were used to buy back stock: assets were reduced and capital is reduced as a result of the transaction.

2. The cash ...

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