Question

The balance in Common Shares on January 1, 2017, and December 31, 2017, is respectively $145,000 and $172,500. During the year, $57,000 repurchase of shares was recorded. During the year, shares were issued. The proceeds from the issue of shares amounted to:

a) $260,500
b) $84,500
c) $29,500
d) $64,500

Answer 1

The proceeds from the issue of shares is calculated by adding the repurchased shares to the ending balance and then subtracting the beginning balance. The correct answer to the question is $84,500, which is option b).

Step-by-step explanation:

The student's question pertains to calculating the proceeds from the issue of shares based on the given financial information of a company. The balance in Common Shares at the beginning of the year (January 1, 2017) was $145,000, and by the end of the year (December 31, 2017), it became $172,500. During the year, the company repurchased its shares for $57,000.

To find out the proceeds from the issue of shares, we need to restore the balance as if the shares were not repurchased and then see the increase. Thus, we add back the repurchased shares to the end balance ($172,500 + $57,000) and subtract the beginning balance from this sum ($229,500 - $145,000), which gives us $84,500 as the proceeds from the issue of shares.

Therefore, the correct answer to the student's question is: The proceeds from the issue of shares amounted to $84,500. Hence, option b) is the right answer.