Question

1. Hillside Corporation has 80,000 shares of common stock issued at $55 each and still outstanding....

1. Hillside Corporation has 80,000 shares of common stock issued at $55 each and still outstanding. Contributed surplus relating to this class of stock is $15,000 and relating to all classes of stock is $60,000. The balance in retained earnings is $175,000. If Hillside repurchases 2,000 shares of this class of common stock for $62, the balance in the common stock account would decrease by:
a. $62,000
b. $124,000
c. $110,000
d. $55,000
e. none of the above but $ .
2. By how much if any will the contributed surplus relating to this class of common stock decrease?
a. $14,000
b. $1,000
c. zero
d. $1,500
e. none of the above but $ .

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Homework Answers

Answer #1

1.The par value of Common shares = $55

Number of shares = 2000

So on rechurchase amount decreased in Common stock = $55*2000 = $110000

So the correct answer is option C) $110000

2. Repurchase price per stock = $62

Par value of Common shares = $55

Premium on repurchase per stock = $7

Number of shares repurchased = 2000

Total premium = 2000*$7 = $14000

Which is adjusted in contribution surplus and it will be decreased by $14000

So the correct answer is Option A) $14000

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