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?
A) 2020 net income is decreased.
B) 2020 net income is increased.
C) Additional paid-in capital is increased.
D) Retained earnings is increased.

Question

Quizplus · Accepted Answer

The entries to record the stock issuance and subsequent acquisition and retirement (per share) are as follows: 11ea937b_35b0_2c73_a419_25c77a0308f1_TB2599_00 The net result is an increase in Paid-in capital-share repurchase (additional paid-in capital) of $5 per share retired.

In 2018, Brock Lee Vegetables, Issued $1 Par Value Common