Question

Where in the financial statements is preferred stock normally reported?

Short answer

The equity section of the balance sheet.

Step-by-step solution

Meaning of Preferred Stock

Preferred equity is a share class that takes precedence over common equity and is considered after creditors at the time of dissolution of a firm. Once the creditors are paid, a fixed return is paid to thepreferred equity holders.

Reporting of Preferred Stock in Financial Statement

Preferred stock is typically reported on the shareholders' equity side of the balance sheet at a value calculated on a par value basis. Any amount in excess of par is represented as the additional paid-in capital.