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On January 1, 2020, Castaway Corp. issued 5,000 shares of preferred stock ($15 par value) at $45 per share. Each share of preferred stock is redeemable at the option of the stockholder at $45 per share. On September 1, 2020, preferred shareholders holding 1,000 shares of preferred stock redeemed their stock. The entry recorded by Castaway Corp. on September 1, 2020, would include the following: A. B. C. D. No net change to stockholders' equity. A decrease to retained earnings for $5,000. A decrease to assets for $45,000. No net change to preferred stock outstanding.

On January 1, 2020, Castaway Corp. issued 5,000 shares of preferred stock ($15 par value) at $45 per share. Each share of preferred stock is redeemable at the option of the stockholder at $45 per share. On September 1, 2020, preferred shareholders holding 1,000 shares of preferred stock redeemed their stock. The entry recorded by Castaway Corp. on September 1, 2020, would include the following: A. B. C. D. No net change to stockholders' equity. A decrease to retained earnings for $5,000. A decrease to assets for $45,000. No net change to preferred stock outstanding.

FINANCIAL ACCOUNTING
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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On January 1, 2020, Castaway Corp. issued 5,000 shares of preferred stock ($15 par value) at $45 per share. Each share of preferred stock is redeemable at the option of the stockholder at $45 per share. On September 1, 2020, preferred shareholders holding 1,000 shares of preferred stock redeemed their stock. The entry recorded by Castaway Corp. on September 1, 2020, would include the following: A. B. C. D. No net change to stockholders' equity. A decrease to retained earnings for $5,000. A decrease to assets for $45,000. No net change to preferred stock outstanding.
Transcribed Image Text:On January 1, 2020, Castaway Corp. issued 5,000 shares of preferred stock ($15 par value) at $45 per share. Each share of preferred stock is redeemable at the option of the stockholder at $45 per share. On September 1, 2020, preferred shareholders holding 1,000 shares of preferred stock redeemed their stock. The entry recorded by Castaway Corp. on September 1, 2020, would include the following: A. B. C. D. No net change to stockholders' equity. A decrease to retained earnings for $5,000. A decrease to assets for $45,000. No net change to preferred stock outstanding.
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