Question

Horton Industries’ shareholders’ equity included 180 million shares of $1 par common stock and a balance in paid-in capital—excess of par of $1,440 million. Assuming that Horton retires shares it reacquires (restores their status to that of authorized but unissued shares), by what amount will Horton’s total paid-in capital decline if it reacquires 5 million shares at $7.00 per share?

Answer 1

Answer:

$35 million

Explanation:

The computation of the total paid-in capital declined is shown below:

= Number of reacquired shares × per share price

= 5 million shares × $7

= $35 million

We simply multiplied the number of acquired shares with the price of each share so that the correct amount can come.

All other information which is given is not relevant. Hence, ignored it