Retirement of Shares
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The stockholder's equity section of Peter Corporation's balance sheet at December 31, 2005 was as follows:
Common stock ($10 par value); authorized 1,000,000
Shares, issued and outstanding 900,000 shares $9,000,000
Additional paid-in capital 2,700,000
Retained earnings 1,300,000
Total stockholders' equity $14,000,000
On January 2, 2006 Peter purchased and retired 100,000 shares of its stock for $1,800,000.
Required:
What was the balance in additional paid in capital and in retained earnings immediately after retirement of the shares?
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Solution Summary
This posting helps with a problem about accounting for corporations. The solution explains the calculation of the balance in additional paid in capital and in retained earnings account immediately after retirement of the shares. Step by step calculations are given in the answer.
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The share were repurchased at a price o 1,800,000/100,000= $18
The issue price of the shares would be $10( the par value) + $3 in the additional paid in capital ...
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