Chapter 15, Problem 12P

To determine

Equity section of the balance sheet: Common shares, preference shares, treasury stock, retained earnings, and additional paid-in capital is 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 is re-acquired and not retired or held for reissue is referred to as treasury stock. Treasury stocks are fully paid shares.

To prepare: To prepare the stockholders’ equity section of the balance sheet, including appropriate notes, for P Company as of June 30, 2018, as it should appear in its annual report to the shareholders.