Stockholders’ Equity Section of the Balance Sheet The newly hired accountant at Grainfi eld Inc. is considering the following list of accounts as he prepares the balance sheet. All of the accounts have positive balances. The company is authorized to issue 1,000,000 shares of common stock and 10,000 shares of preferred stock. The treasury stock was purchased at $5 per share.

Treasury stock (common) $ 15,000 Retained earnings 54,900 Dividends payable 1,500 Common stock, $1 par 100,000 Additional paid-in capital 68,400 Preferred stock, $10 par, 5% 50,000 Required 1. Prepare the Stockholders’ Equity section of the balance sheet for Grainfi eld.

2. Explain why some of the listed accounts are not shown in the Stockholders’ Equity section.

AppendixLO1