Warsaw Ltd.has 100,000 no par value common shares authorized, issued, and outstanding.All 100,000 shares were issued at $8 per share.Retained earnings are $120,000.If 10,000 common shares were reacquired at $6 and cancelled,

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When shares are reacquired at a price lower than the issue price, the difference is credited to contributed surplus. Here, 10,000 shares were reacquired at $6, which is $2 less than the issue price of $8, resulting in a $20,000 increase in contributed surplus.