E10-39B. (Learning Objectives 2, 3: Shareholders’ equity section of a Balance Sheet) Baikal Software had the following selected account balances at December 31, 20X6 (in thousands, except par value per share):

Requirements 1. Prepare the shareholders’ equity section of Baikal Software’s Balance Sheet (in thousands).
2. How can Baikal have a larger balance of treasury shares than the sum of ordinary shares and paid-in capital in excess of par?

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Inventory...... 705 Property, plant and Ordinary share, 0.50 par per share, 900 shares equipment, net. 903 Paid-in capital in excess of par. 897 issued......... Treasury share, authorized, 300 shares Retained earnings. 150 2,270 140 shares at cost.... 1,610 Accounts receivable, net...... 200 Other shareholders' equity. (726)* Notes payable. 1,166