Ace Industries has the following shareholders equity accounts at December 31, 20X1: ...
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Accounting
Ace Industries has the following shareholders equity accounts at December 31, 20X1:
Preferred stock, $100 par value, 10% dividend, 50,000 shares issued and outstanding
$
5,000,000
Common stock, $6 par value, 1 million shares issued and outstanding
6,000,000
Paid-in capital in excess of par
119,000,000
Unrestricted retained earnings
7,500,000
Retained earnings restricted for plant expansion
2,500,000
On December 15, 20X1 Ace Industries repurchased 200,000 shares of its common stock for $10 per share. Based on its shareholders equity accounts, what can be inferred about this purchase?
Ace is holding $2,000,000 of treasury stock which is being disclosed in the notes to the financial statements.
Ace retired the shares by reducing the common stock and paid-in capital accounts.
Not enough information is provided to determine how Ace recorded the purchase.
Ace is reporting the shares as a $2,000,000 investment on the asset side of the balance sheet.
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