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

Question

Coby

Business

17 April, 05:30

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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Harvey · Answer 1

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.