Circle Corporation Has 1,000 Shares of Common Stock Outstanding

question 53

Multiple Choice

Circle Corporation has 1,000 shares of common stock outstanding. Circle redeems 450 shares owned by Dennis for $75,000 in complete redemption of Dennis's interest. The redemption qualifies as a sale. When the redemption is made, Circle Corporation has $150,000 of current and accumulated E&P and paid-in capital of $50,000. The distribution reduces paid-in capital by

• A)$67,500.
• B)$22,500.
• C)$7,500.
• D)$0.

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Definitions:

Lutheranism

A major branch of Protestant Christianity which identifies with the theology of Martin Luther, a German monk and theologian who sought to reform the practices of the Roman Catholic Church in the 16th century.

Henry VIII

King of England from 1509 until his death in 1547, known for his six marriages and his role in the separation of the Church of England from the Roman Catholic Church, leading to significant religious and political changes.

Annul

To declare invalid an existing law, decree, decision, or marriage, making it as though it never existed.

Catherine of Aragon

The first wife of Henry VIII of England and queen consort from 1509 to 1533, best known for her marriage's role in the start of the English Reformation.