If a company issues 2,000 shares for $55 and then repurchases 50 shares at $50, how much is in the account "contributed surplus on retirement of shares'?
A)$250
B)$2,750
C)$107,250
D)$110,000

Question

Quizplus · Accepted Answer

The contributed surplus on retirement of shares is calculated by subtracting the cost of repurchased shares from the original amount paid for those shares. The company initially issued 2,000 shares at $55, totaling $110,000. It then repurchased 50 shares at $50, totaling $2,500. The difference between the original price paid for the 50 shares ($55 * 50 = $2,750) and the repurchase price ($2,500) is $250, which is the amount that goes into the contributed surplus on retirement of shares account.

If a Company Issues 2,000 Shares for $55 and Then