How to Show a Stockholder's Equity on a Balance Sheet

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Stockholders' equity equals assets minus liabilities and is the total value of the shareholders' ownership of a company net of any debts owed by the company. A company shows stockholders' equity on the balance sheet in a section beneath the liabilities section that contains items such as common stock, retained earnings and treasury stock. Stockholder's equity differs from the market value of equity because the balance sheet contains items listed at book value or historical value. Market value is what the equity in a company is worth on the open market.

Things You'll Need

  • Company's general ledger
  • Company's balance sheet
  • Write "Stockholders' Equity" on the balance sheet underneath the liabilities section to designate the beginning of the stockholders' equity section.

  • Determine the total par value of common stock, the par value per share of common stock and the number of shares issued, authorized and outstanding from a company's general ledger at the end of the accounting period.

  • Write "Common stock," the par value per share, the number of shares issued, authorized and outstanding, and the dollar amount of the total par value of common stock as a line item on the first line of the stockholders' equity section. For example, write "Common stock, $0.01 par value, 50,000 shares authorized and issued and 40,000 shares outstanding" and "$500" on the first line of the stockholders' equity section.

  • Determine the dollar amounts of paid-in capital in excess of par of common stock, retained earnings and treasury stock and the number of shares of treasury stock from a company's general ledger at the end of the accounting period.

  • Write "Paid-in capital in excess of par -- common stock" and its dollar amount on the second line of the stockholders' equity section. For example, write "Paid-in capital in excess of par -- common stock" and "$200,000."

  • Write "Retained earnings" and its dollar amount on the third line of the stockholders' equity section. For example, write "Retained earnings" and "$75,000."

  • Write "Less: Treasury stock," the number of shares of treasury stock and the dollar amount of treasury stock on the fourth line of the stockholders' equity section. Enclose the dollar amount in parentheses to designate that treasury stock reduces retained earnings. For example, write "Less: Treasury stock, 10,000 shares" and "($60,000)."

  • Add the amounts of common stock, paid-in capital in excess of par of common stock and retained earnings, and subtract the amount of treasury stock from the result to determine total stockholders' equity. For example, add $500, $200,000 and $75,000, and subtract $60,000. This equals $215,500 in total stockholders' equity.

  • Write "Total stockholders' equity" and the dollar amount on the fifth line of the stockholders' equity section. For example, write "Total stockholders' equity" and "$215,500."

Tips & Warnings

  • If a company has not repurchased any of its own stock, exclude treasury stock from the balance sheet and calculations.
  • If a company has preferred stock, perform Steps 2, 3 and 5 using amounts of preferred stock from the general ledger. Write the "Preferred stock" line item above the "Common stock" line item and the "Paid-in capital in excess of par -- preferred stock" line item above that of common stock.

References

  • Photo Credit Comstock/Comstock/Getty Images
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