In 2019, Gerry , Inc. issued $1 par common stock for $35 per share. No other common stock transactions occurred until July 31, 2021, when Winn acquired some of the issued shares for $30 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement? A. 2021 net income is decreased. B. Additional paid-in capital is decreased. C. 2021 net income is increased. D. Retained earnings is increased.

In 2019, Gerry , Inc. issued $1 par common stock for $35 per share. No other common stock transactions occurred until July 31, 2021, when Winn acquired some of the issued shares for $30 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement? A. 2021 net income is decreased. B. Additional paid-in capital is decreased. C. 2021 net income is increased. D. Retained earnings is increased.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A. 2021 net income is decreased.

B. Additional paid-in capital is decreased.

C. 2021 net income is increased.

D. Retained earnings is increased.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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