Final answer:
The stockholders' equity for ChemFast Corporation includes contributed capital preferred stock, additional paid-in capital, common stock, retained earnings, and is offset by treasury stock. It represents the shareholders' equity in the company, with treasury stock reducing the total equity available to shareholders.
Step-by-step explanation:
The stockholders' equity section of a balance sheet represents the equity that shareholders have in a company. For ChemFast Corporation, the stockholders' equity on the December 31 balance sheet consists of:
- Contributed capital preferred stock: $104,000
- Additional paid-in capital, preferred: $14,300
- Common stock: $600,000
- Retained earnings: $30,000
The sum of these figures contributes to the shareholders' equity, being offset by:
- Treasury stock, 1,000 preferred shares at cost: ($9,500)
The treasury stock is a deduction from the total shareholders' equity since these shares are owned by the company itself after being repurchased, effectively reducing the equity available to shareholders. To determine the total stockholders' equity, one would add the values of contributed capital preferred stock, additional paid-in capital, common stock, and retained earnings, and then subtract the cost of the treasury stock.