In 2018, Brock Lee Vegetables, issued $1 par value common stock for $30 per shar
ID: 2516613 • Letter: I
Question
In 2018, Brock Lee Vegetables, issued $1 par value common stock for $30 per share. No other common stock transactions occurred until March 31, 2020, when Brock Lee acquired some of the issued shares for $25 per share and retired them. Which of the following statements is true for this acquisition and retirement?
2020 net income is increased.
Additional paid-in capital is increased.
Retained earnings is increased.
2020 net income is decreased.
a.2020 net income is increased.
b.Additional paid-in capital is increased.
c.Retained earnings is increased.
d.2020 net income is decreased.
Explanation / Answer
Option D is correct
2020 Net Income will be decreased.
When shares are issued at $30 in 2018, additional paid in capital was increased by $29, and when shares are retired in 2020, the net income will decrease becase shares are issued at $25 per share