Chapter 5, Problem 11BE

To determine

Common stock: Common stock provides ownership to the holder of the instrument. Preferred stock also represents ownership in a company with some restrictions. The amount paid additionally above the fair value of the stock is termed as capital paid in excess. Retained earnings is earning not distributed to the shareholders in form of dividends, but retained with a purpose of reinvestment or to discharge debt. Noncontrolling interest refers to equity investment in a subsidiary company which is not directly or indirectly attributable to a parent company. All these accounts form a part of shareholders’ equity.

To prepare: To prepare the stock holder’s equity in the Balance sheet.