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    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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    https://brainmass.com/business/accounting-for-corporations/retirement-shares-84080

    Solution Preview

    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 ...

    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.

    $2.19