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11 June, 03:46

Bella Donna Company has 100,000 shares of $3 par common stock issued and outstanding as of January 1, 2018. The shares were originally issued for $8 per share. On February 3, 2018, Bella Donna repurchased 4,210 shares at $6 per share for the purposes of retiring them. What will be the balance in Paid in capital in excess of par after February 3rd transaction

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  1. 11 June, 04:09
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    The balance in the paid in capital in excess of par will be $478,950.

    Explanation:

    As 4,210 shares is retired and each shares carries a $5 Paid-in capital in excess of par (Issued price - Par value = $8 - $3 = $5), the retirement of 4,210 shares will include the clear of 4,210 x 5 = $21,050 in Paid-in capital in excess of par.

    The beginning balance of the Paid-in capital in excess of par account = (8 - 3) x 100,000 = 300,000

    => The remaining balance of the Paid-in capital in excess of par account = 500,000 - 21,050 = $478,950.

    So, the answer is $478,950.
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