Answer (B) is correct . Equity consists of contributed capital, retained earnings, and accumulated other comprehensive income. Equity accounts may therefore include retained earnings, preferred stock, common stock, and additional paid-in capital. Treasury stock is a contra account in the equity section of the balance sheet. The total is $514,000 ($141,000 + $175,000 + $50,000 + $196,000 – $48,000).
Answer (A) is incorrect because Retained earnings should be included in equity.
Answer (C) is incorrect because The amount of $562,000 results from a failure to deduct treasury stock.
Answer (D) is incorrect because Treasury stock should be deducted from, not added to, equity.
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What amount of equity will be reported on Felicity’s December 31 statement of financial position?
