Ace Industries has the following shareholders' equity accounts at December 31, 2015:

\begin{array}{lr}\text { Preferred stock, S100 par value, } 10 \% \text { dividend, } 50,000 \text { shares issued and outstanding } & \$ 5,000,000 \\\text { Common stock, S6 par value, } 1 \text { million shares issued and outstanding } & 6,000,000 \\\text { Paid-in capital in excess of par } & 119,000,000 \\\text { Unrestricted retained earnings } & 7,500,000 \\\text { Retained eamings restricted for plant expansion } & 2,500,000\end{array}

-On December 15,2015 Ace Industries repurchased 200,000 shares of its common stock for $10 per share.Based on its shareholders' equity accounts,what can be inferred about this purchase?
A)Ace is holding $2,000,000 of treasury stock which is being disclosed in the notes to the financial statements.
B)Ace retired the shares by reducing the common stock and paid-in capital accounts.
C)Ace is reporting the shares as a $2,000,000 investment on the asset side of the balance sheet.
D)Not enough information is provided to determine how Ace recorded the purchase.

When a Publicly Traded Company Issues Both Common Stock and Preferred

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