Homework Answers
Answer: Debit to Common shares, Contributed Surplus, and Retained earnings and Credit to Cash
Explanation:
Journal Entry for Reacquiring of 25,000 shares,
| Account title and Explanation | Debit | Credit |
| Common shares [25,000 x $4.00 average price] | $100,000 | |
| Contributed surplus [To the extent of balance] | $5,000 | |
| Retained earnings [Remaining balance] | $1,250 | |
| Cash [25,000 x $4.25] | $106,250 | |
| [To record re-acquisition of common shares] |
Thus,
Debit to Common shares and Credit to Cash is Incorrect.
Debit to Common shares, Contributed Surplus, and Retained earnings and Credit to Cash is Correct.
Debit to Common shares, Contributed Surplus, and Credit to Cash is incorrect.
Debit to Common shares, and Retained earnings and Credit to Cash is incorrect.
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