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KatRina [158]
3 years ago
8

Horton Industries’ shareholders’ equity included 100 million shares of $1 par common stock and a balance in paid-in capital—exce

ss of par of $900 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 2 million shares at $8.50 per share?
Business
1 answer:
Oksanka [162]3 years ago
7 0

Answer:

The common stock would decline by $2 million

The paid in capital in excess of par would decline by $15 million

The share capital would decline by $17 million

Explanation:

The balance in  common stock would decline by the par value of the 2 million shares reacquired in the year,that is 2 million*$1=$2,000,000

However balance in the paid-in share capital in excess of par would decline by $7.5 for each of the 2 million shares reacquired i.e 2 million *$7.5=$15,000,000

However the total reduction in  share capital of Horton Industries is the sum of the reduction in common stock of $2 million and the reduction in paid-in capital in excess of par of $15 million i,e $17 million

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Answer:

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Explanation:

The sales, expenses, income summary and drawings accounts will be closed therefore will not be part of the post-closed trial balance.

Thew capital Account will suffer the net change of all these account thus, we can list the assets and liabilities and then, solve for Capital by the difference:

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327,060 = 150 + 18,100 + 9,000 + 1,420 + 340 + Capital

Capital = 327,060  - (150 + 18,100 + 9,000 + 1,420 + 340)

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