The Jennings Group reacquired 4 million of its shares at $80 per share as treasu

Question

The Jennings Group reacquired 4 million of its shares at $80 per share as treasury stock. Last year, for the first time, Jennings sold 3 million treasury shares at $81 per share.

  

By what amount will Jennings’ retained earnings decline if it now sells the remaining 1 million treasury shares at $74 per share? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)

The Jennings Group reacquired 4 million of its shares at $80 per share as treasury stock. Last year, for the first time, Jennings sold 3 million treasury shares at $81 per share.

The Jennings Group reacquired 4 million of its shares at $80 per share as treasury stock. Last year, for the first time, Jennings sold 3 million treasury shares at $81 per share By what amount will Jennings' retained earnings decline if it now sells the remaining 1 million treasury shares at $74 per share? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10 Retained earnings will decline by 18 million

Explanation / Answer

Paid in capital from sale of treasury stock = (81-80)*3 = 3 million

Retained earnings will decline by $3 million

Date accounts & explanation debit credit Cash 74 Paid in capital from sale of treasury stock 3 Retained earnings 3      Treasury stock (80*1) 80

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