Question

The balance sheet of FIFA Cup Company included the following shareholders' equity section at December 31,...

The balance sheet of FIFA Cup Company included the following shareholders' equity section at December 31, 2020:
($ in millions)
Common stock ($1 par, authorized 200 million shares, issued and outstanding 180 million shares)
$
180
Paid-in capital—excess of par
1,080
Retained earnings
560
Total shareholders' equity
$
1,820
On January 5, 2021, FIFA purchased and retired 2 million shares for $18 million. Immediately after retirement of the shares, the balances in the retained earning account is:
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Answer #1

$556 million.

working;

par value per share of common stock =$1.

paid in capital in excess of par per share = $1080 million / 180 million shares =>$6.

total value per share = $6+$1=>$7.

value that can be attributable to 2 million shares sold =>$7 * 2 million =>$14 million.

actual retirement value of shares =$18 million.

excess amount debited to retained earnings =>$18 million - $14 million =>$4 million.

the balance of retained earnings will be = $560 million existing- $4 million excess amount =>$556 million.

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