Question
In: Accounting
Coral Cleaners Ltd reported the following information in the shareholders' equity section of its 30 June...
Coral Cleaners Ltd reported the following information in the shareholders' equity section of its 30 June 2017, statement of financial position.
7% cumulative, non-participating preferred share (500 shares) $50 000
Ordinary share, 100 000 shares $625 000
Retained earnings $825 000
If Coral Cleaners Ltd repurchased 2000 ordinary shares for $20 per share, what is the amount of total shareholders' equity after this transaction?
|
$1 460 000 |
||
|
$1 470 000 |
||
|
$1 530 000 |
||
|
$1 500 000 |
Solutions
Expert Solution
| Correct Answer is $ 1460000 | |
| Explanation: | |
| Shareholde's Equity Section | |
| 7% cumulative, non-participating preferred share (500 shares) $50 000 | $50,000 |
| Ordinary share, 100 000 shares $625 000 | $625,000 |
| Retained earnings $825 000 | $825,000 |
| Less: Treasury Stock (2000*$20) | $40,000 |
| $1,460,000 | |
| Treasury stock( Repurchase of share) is shown as a reduction from Sharholders quity because it result in reduction of equity (Liabilities) and reduction of cash well (asset) |
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