Ace Industries has the following shareholders equity accounts at December 31, 20X1: ...
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Accounting
Ace Industries has the following shareholders equity accounts at December 31, 20X1:
| Preferred stock, $100 par value, 10% dividend, 50,000 shares issued and outstanding | $ | 5,000,000 | |
| Common stock, $6 par value, 1 million shares issued and outstanding | 6,000,000 | ||
| Paid-in capital in excess of par | 119,000,000 | ||
| Unrestricted retained earnings | 7,500,000 | ||
| Retained earnings restricted for plant expansion | 2,500,000 | ||
On December 15, 20X1 Ace Industries repurchased 200,000 shares of its common stock for $10 per share. Based on its shareholders equity accounts, what can be inferred about this purchase?
Ace is holding $2,000,000 of treasury stock which is being disclosed in the notes to the financial statements.
Ace retired the shares by reducing the common stock and paid-in capital accounts.
Not enough information is provided to determine how Ace recorded the purchase.
Ace is reporting the shares as a $2,000,000 investment on the asset side of the balance sheet.
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