Baria Inc.is repurchasing 10,000 common shares.The price is $5.00/share and the average price is $5.10.Assuming that there is a contributed surplus balance of $5,000, which accounts will be affected by the transaction?
A)Common shares, Contributed Surplus, Retained Earnings and Cash
B)Common shares, Contributed Surplus and Cash
C)Common shares, Retained Earnings and Cash
D)Common shares and Cash

Question

Quizplus · Accepted Answer

When a company repurchases its own shares, the accounts typically affected are Common Shares, Contributed Surplus, and Cash. The difference between the repurchase price and the average price does not affect Retained Earnings in this context, as the transaction deals with equity accounts and the cash used for the purchase.

Baria IncIs Repurchasing 10,000 Common Shares