The Jennings Group reacquired 2 million of its shares at $52 per share as treasu

Question

The Jennings Group reacquired 2 million of its shares at $52 per share as treasury stock. Last year, for the first time, Jennings sold 1 million treasury shares at $53 per share.

By what amount will Jennings’ retained earnings decline if it now sells the remaining 1 million treasury shares at $49 per share? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)

By what amount will Jennings’ retained earnings decline if it now sells the remaining 1 million treasury shares at $49 per share? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)

Explanation / Answer

Hey Dear Student !!

Retained Earnings will be reduced by the difference of Amount in Purchase and sale price X No of Shares.

Calculation would be as follows:

Shares Acquired at $52 per share
Share sold at $49 per share
Loss $3 per share
No of shares 1 million

Retained earnings will get reduced by 3X1 million= $ 3 million

Pleasure Teaching you !!

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