QUESTION 2 In 2012, Company issued 10 share of $1 par value common stock at $10

Question

QUESTION 2 In 2012, Company issued 10 share of $1 par value common stock at $10 per share and prepared the following journal entry Cash $100 Common stock APIC, common stock. $90 in 2018, Company repurchases 1 share of this common stock for $15 and immediately retires the share (it is never held as a treasury share). The share repurchase and retirement in 2018 will result in the following changes to total owners equity and total paid-in capital (contributed capital) Owners' equity Paid-in capital Increase $10 (a) Increase $1 (b)Decrease $10 Decrease S5 Decrease $10 Decrease $15 - ||||(c) : Decrease $15 (d)Decrease $15

Explanation / Answer

Decrease in common stock = 1 share *15 = 15

Decrease in paid in capital = 1 share *(15)=1 5

Option D is correct, that is decrease of owner's capital by 15 and decrease in paid in capital by 15

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