-? ezto.mteducation.com/hm.tpx E connect ACCOUNTING Ch. 18 Test Ques 10.00 point

Question

-? ezto.mteducation.com/hm.tpx E connect ACCOUNTING Ch. 18 Test Ques 10.00 points Brief Exercise 18-8 Treasury stock [LO18-5) The Jennings Group reacuired 3 ilion fit shae er share as treasury stock Last year, for the first time, Jennings sold 1 milion treasury shares at $56 per share By what amount will Jennings retained eanings decline if it now sells the remaining 2 million treasury shares at $52 per share? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).) will decline malion References eBook & Resources Worksheet Brief Exercise 18.8 Treasury stock [LO18 5) TOSHIBA esc

Explanation / Answer

Calculate retained earnings will decline by :

Paid in capital from sale of treasury stock created on first reissue of treasury stock = (56-55)*1 = 1 Million

Deficiency from reissued of second treasury stock = (52-55)*2 = 6 million

1 million deficiency covered by paid in capital from sale of treasury stock and 5 million will be covered by retained earnings.

So retained earnings will decline by 5 million

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