Answer and Explanation:
The preparation of the stockholder equity section of the balance sheet is presented below:
Stockholders' equity
Paid in capital
Capital stock
5% preferred stock, $100 par value, noncumulative, 9,000 shares are issued and outstanding $900,000
Common stock, no par, $2 stated value, $2,400,000
Total capital stock $3,300,000 (A)
Additional paid in capital
Paid-in Capital in Excess of Par Value $67,500
Paid-in Capital in Excess of Stated Value - Common Stock $1,575,000
Total additional paid in capital $1,642,500 (B)
Total paid in capital $4,942,500 (A + B)
Add: Retained earnings $ 2,001,000
Total paid in capital and retained earnings $6,943,000
Less: Treasury stock (18,000 common shares) $(108,000)
Total stockholders' equity $6,835,500
