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3 years ago

Caramel Corporation has 5,000 shares of stock outstanding.

Business

1 answer:

Jet001 [13]3 years ago

4 0

Answer and Explanation:

Caramel Corporation outstanding share are 5000

Caramel Corporation distributes $145,000 in an exchange for 1000 number of shares in a qualifying stock redemption.

Given : caramel Corportaion has E&P of around $300,000.

E&P attributable to 1000 number of shares = $300000 * 1000 / 5000=\$ 60,000$

Therefore, the consequence of this redemption are $60,000 charge to E&P and reduction in caramel Corporation paid-in capital account is $85000 ($145000 subtract $60000)

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