Use the following information for questions.
The balances in Belfast Inc.'s shareholders' equity accounts at December 31, 2020 are: At this, time, a financial reorganization was approved. Equipment was written down $ 101,800, and inventory increased $ 5,800.
-As the first step of the reorganization, how much should the Common Shares account be adjusted by?
A) $ 364,000
B) $ 400,000
C) $ 460,000
D) $ 1,000,000

Question

Use the following information for questions.
The balances in Belfast Inc.'s shareholders' equity accounts at December 31, 2020 are:  At this, time, a financial reorganization was approved. Equipment was written down $ 101,800, and inventory increased $ 5,800.
-As the first step of the reorganization, how much should the Common Shares account be adjusted by?
A) $ 364,000 
B) $ 400,000 
C) $ 460,000 
D) $ 1,000,000

Quizplus · Accepted Answer

The Common Shares account should be adjusted by the amount that represents the reduction or change in the equity due to the reorganization. Without specific details on the reorganization process, the most logical assumption is to adjust by the amount that directly reflects changes in the common shares' value or quantity. Option A seems to be the most specific adjustment related to common shares, assuming it reflects the direct impact of the reorganization on the common shares' value.

Use the Following Information for Questions