Find the effect on retained earnings

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Question - CAP Corporation has reacquired 50,000 of its shares at $13 per share. The average cost of these shares was $11 per share and there was a prior credit balance of $100,000 in the contributed surplus account. Assuming the balance in the contributed surplus account is the result of prior transactions relating to the shares now being reacquired, the effect on retained earnings would be as follows:

a credit of $ 100,000.

a credit of $650,000.

a debit of $100,000.

no impact.

Reference no: EM132226017

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