Question

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

Answer 1

The balance in the paid in capital in excess of par will be $478,950.

Step-by-step 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.