There are currently 400,000 no par value common shares of GK Ltd. reflected in the share capital account at a total value of $8,000,000. A further 200,000 common shares are issued at $23 per share. Subsequently, GK Ltd. purchased for retirement 100,000 common shares at $22 per share. The effect of the common share retirement is: A. $2,000,000 reduction of share capital. B. $200,000 charge to retained earnings.
There are currently 400,000 no par value common shares of GK Ltd. reflected in the share capital account at a total value of $8,000,000. A further 200,000 common shares are issued at $23 per share. Subsequently, GK Ltd. purchased for retirement 100,000 common shares at $22 per share. The effect of the common share retirement is: A. $2,000,000 reduction of share capital. B. $200,000 charge to retained earnings.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A stock option will have an intrinsic value when the exercise price is $10 and the
current share price is $8.
True
False
When a corporation sells common shares on credit, there should be a debit to
the following account:
A. Common stock subscriptions receivable.
B.
C.
D. Common stock notes receivable.
A.
There are currently 400,000 no par value common shares of GK Ltd. reflected
in the share capital account at a total value of $8,000,000. A further 200,000
common shares are issued at $23 per share. Subsequently, GK Ltd. purchased
for retirement 100,000 common shares at $22 per share. The effect of the
common share retirement is:
B.
Common stock accounts receivable.
C.
Cash receivable.
D.
$2,000,000 reduction of share capital.
$200,000 charge to retained earnings.
$100,000 charge to contributed capital-retirement.
$100,000 charge to retained earnings.
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