On January 5, 2007, Epsom purchased and retired 1 million shares for $9 million. Immediately after retirement of the shares, the balances in the paid-in capital – excess of par and retained earnings accounts are:

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On January 5, 2007, Epsom purchased and retired 1 million shares for $9 million. Immediately after retirement of the shares, the balances in the paid-in capital – excess of par and retained earnings accounts are:

A) Paid-in capital – excess of par: $540; Retained earnings: $280
B) Paid-in capital – excess of par: $540; Retained earnings: $272
C) Paid-in capital – excess of par: $534; Retained earnings: $278
D) Paid-in capital – excess of par: $532; Retained earnings: $280

Answer: C

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