The balance sheet of Messi Services included the following shareholders' equity section at December 31, 2018: On January 5, 2019, Holmes purchased 2 million treasury shares for $9 million. Immediately after the purchase of the shares, the balances in the paid-in capital- excess of par and retained earnings accounts are:
A) Option A
B) Option B
C) Option C
D) Option D

Question

The balance sheet of Messi Services included the following shareholders' equity section at December 31, 2018:  On January 5, 2019, Holmes purchased 2 million treasury shares for $9 million. Immediately after the purchase of the shares, the balances in the paid-in capital- excess of par and retained earnings accounts are: 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Quizplus · Accepted Answer

The treasury stock is deducted from total shareholders' equity as a separate line item - it is not part of either paid-in capital or retained earnings.

The Balance Sheet of Messi Services Included the Following Shareholders