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What would be the charge to babaloos e and p

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Reference no: EM131794241

Problem

Babaloo Corporation has 5,000 shares of stock outstanding. Desi owns 2,000. The rest are owned by unrelated individuals. Babaloo redeems 1,000 shares for $300,000 at a time when it has paid-in capital of $400,000 and E & P of $1.0 million. What would be the charge to Babaloo's E & P as a result of the redemption?
a. $60,000
b. $200,000
c. $280,000
d. $300,000
e. None of the above.

Reference no: EM131794241

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