Question

The balance sheet of Epsom Services included the following shareholders' equity section at December 31, 2016: is in millions) Common stock ($1 par value, authorized 100 milion shares, issued and outstanding 90 million shares) $ 90 Paid-in capital - excess of par 540 Retained earnings 200 Total shareholders' equity $910 On January 5, 2017, Epsor purchased and retired 1 million shares for $9 million. Immediately after retirement of the share: the balances in the paid in capital - excess of par and retained earnings accounts are: Paid-in capital R etained - excess of par earnings $540 $280 $540 S272 $534 $278 $532 $280 و نه هم D)

Answer 1

Solution: Option C

Working: The journal entry will be:

Particulars	Dr	Cr
	(in million)	(in million)
Common stock	$1
Paid-in capital	$6
Retained earnings (plug)	$2
Cash		$9

　

Thus Paid-in capital – excess of par balance: $540 - $6 = $53';

Retained earning balance: $280 - $2 = $278