Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ace Industries has the following shareholders equity accounts at December 31, 2018: Preferred stock, $100 par value, 10% dividend, 50,000 shares issued and outstanding $

Ace Industries has the following shareholders equity accounts at December 31, 2018:

Preferred stock, $100 par value, 10% dividend, 50,000 shares issued and outstanding $ 5,000,000
Common stock, $6 par value, 1 million shares issued and outstanding 6,000,000
Paid-in capital in excess of par 119,000,000
Unrestricted retained earnings 7,500,000
Retained earnings restricted for plant expansion 2,500,000

On December 15, 2018 Ace Industries repurchased 200,000 shares of its common stock for $10 per share. Based on its shareholders equity accounts, what can be inferred about this purchase?

Multiple Choice

  • Ace is holding $2,000,000 of treasury stock which is being disclosed in the notes to the financial statements.

  • Ace retired the shares by reducing the common stock and paid-in capital accounts.

  • Ace is reporting the shares as a $2,000,000 investment on the asset side of the balance sheet.

  • Not enough information is provided to determine how Ace recorded the purchase.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Cost Accounting

Authors: Edward J. Vanderbeck

15th Edition

978-0840037039, 0840037031

More Books

Students also viewed these Accounting questions

Question

How is a futures contract settled?

Answered: 1 week ago