Ace Industries has the following shareholders' equity accounts at December 31, 2018: Preferred stock, $100 par value, 10% dividend, 50,000 shares issued and outstanding$5,000,000 Common stock, $6 par value, 1 million shares issued and outstanding 6,000,000 Paid-in capital in excess of par 119,000,000 Unrestricted retained earnings 7,500,000 Retained earnings restricted for plant expansion 2,500,000 On December 15, 2018 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 retired the shares by reducing the common stock and paid-in capital accounts.
B. Ace is reporting the shares as a $2,000,000 investment on the asset side of the balance sheet.
C. Ace is holding $2,000,000 of treasury stock which is being disclosed in the notes to the financial statements.
D. Not enough information is provided to determine how Ace recorded the purchase.
Answer: A
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