This is problem P-18-1 in the Intermediate Accounting 2 book from authors Spiceland, Nelson, and Thomas. I don't understand why PIC-in excess of par is debited at 38 and Retained Earnings is debited at 10. Why not have one of them debited at 48?
Homework Answers
the shares were initially issued at $20.
They were of par value $1.
paid in capital in excess of par = ($20-1)=>$19.
so on 2 million shares reacquired:
amount related to common stock will be = 2 million * $1 =>$2 million............(this is debited).
amount related to paid in capital in excess of par will be = 2 million *$19 =>$38 million.....(this is debited )
since the cash paid is $50 million, which is greater than the value of shares i.e ($2 million+ 38 million)=.$40 million, the excess payment of $10 million is reduction of shareholder's equity, which is represented by debiting retained earnings.
Since cash paid is $50 million, cash paid will be credited.
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This is problem P-18-1 in the Intermediate Accounting 2 book
from authors Spiceland, Nelson, and Thomas....
This is from Intermediate Accounting by authors: Spiceland, Nelson, and Thomas. Ch.18 P-2 question #1-b.) I...
This is from Intermediate Accounting by authors: Spiceland,
Nelson, and Thomas. Ch.18 P-2 question #1-b.) I understand how the
cash should be debited for 24,000,000 but shouldn't Paid-In-Capital
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out the 24,000,000 that cash is debited by? Please explain in
detail.
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Since $12 *2,000,000 shares is 24,000,000 wouldn't you simply
credit Treasury Stock by that much? Where do they get 20,000,000
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understand how cash is debited by 24,000,000. Please explain in
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