shares at the time of repurchase. Which of the following correctly describes the effect of the share repurchase and retirement? Group of answer choices a. Additional paid-in capital is decreased. b. Retained earnings is increased. c. 2020 net income is decreased. d. 2020 net income is increased.

shares at the time of repurchase. Which of the following correctly describes the effect of the share repurchase and retirement? Group of answer choices a. Additional paid-in capital is decreased. b. Retained earnings is increased. c. 2020 net income is decreased. d. 2020 net income is increased.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. In 2018, Brown, Inc., issued $1 par common stock for $28 per share. No other common stock transactions occurred until August 31, 2020, when Brown repurchased some of its issued shares on the open market $23 per share. Brown retired the shares at the time of repurchase. Which of the following correctly describes the effect of the share repurchase and retirement? Group of answer choices

a. Additional paid-in capital is decreased.

b. Retained earnings is increased.

c. 2020 net income is decreased.

d. 2020 net income is increased.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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