Chapter 15, Problem 10E

To determine

Equity section of the balance sheet: Common shares, preference shares, treasury stock, retained earnings, and additional paid-in capital are reported on the equity section of the balance sheet.

Common and preferred stock are reported at par values in the stockholders’ equity section of the balance sheet. Any excess over the par value is reported as paid-in capital. Shares that are reacquired but not retired or held for reissue are referred to as treasury stock. Treasury stocks are fully paid shares.

To determine the par value and the cost of treasury stock, and prepare equity section of the balance sheet.