The last step in a Quasi Reorganization is to eliminate the final deficit in retained earnings by transferring enough excess paid in capital to retained earnings. What happens when the excess paid in capital is not enough to cover the deficit in retained earnings?

a. The company must issue more stock.

b. The deficit in retained earnings can be reduced by only the amount in excess paid in capital leaving a smaller deficit.

c. More excess paid in capital is created by reducing the par value of the common stock.

d. The Quasi Reorganization cannot be done.

explain