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Blizzard [7]
3 years ago
10

In 2009, Winn, Inc. issued $1 par value common stock for $35 per share. No other common stock transactions occurred until July 3

1, 2011, when Winn acquired some of the issued shares for $32 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?
a. 2018 net income is decreased.
b. Additional paid-in capital is decreased.
c. 2018 net income is increased.
d. Retained earnings is increased.
Business
1 answer:
Marina86 [1]3 years ago
6 0

Answer: b. Additional paid-in capital is decreased.

Explanation:

Assume Winn sold 100 shares.

The entry would have recorded Common stock at $100 because the par value is $1.

Additional paid-in capital would have been:

= (35 - 1) * 100

= $3,400

When the stock was now required, it was required at $32. Assuming 50 were reacquired:

Common stock would be = 100 - 50 = $50

Additional paid-in capital would be = 3,400 - ((32 - 1) * 50) = $1,850

Additional paid-in capital would therefore decrease when the shares are reacquired.

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Answer:

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<u>Calculation of WACC.</u>

Capital Source              Weight            Cost               Total

Debt                                  40%            6.60%             2.64%

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Answer:

B

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It is expressed in years and fraction of years.

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Year 1                                                 3000               17000

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So thats B

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