What is the difference between the following two questions? In 2021, Brock Lee Vegetables, issued $1 par
Question:
What is the difference between the following two questions?
In 2021, Brock Lee Vegetables, issued $1 par value common stock for $30 per share. No other common stock transactions occurred until March 31, 2023, when Brock Lee acquired some of the issued shares for $25 per share and resold them for $20 per share. Which of the following statements is true for this acquisition and retirement?
A.) 2023 net income is increased
B.) Retained earnings is decreased
C.) 2023 net income is decreased
D.) Additional paid-in capital is increased
In 2019, Winn, Inc. issued $1 par common stock for $35 per share. No other common stock transactions occurred until July 31, 2021, when Winn acquired some of the issued shares for $30 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?
A) 2021 net income is decreased.
B) Additional paid-in capital is decreased.
C) 2021 net income is increased.
D) Retained earnings is increased.
Why is Additional paid-in capital increased in one but decreased in the other?
