Answer: b. Additional paid-in capital is decreased.
Explanation:
Assume Winn sold 100 shares.
The entry would have recorded Common stock at $100 because the par value is $1.
Additional paid-in capital would have been:
= (35 - 1) * 100
= $3,400
When the stock was now required, it was required at $32. Assuming 50 were reacquired:
Common stock would be = 100 - 50 = $50
Additional paid-in capital would be = 3,400 - ((32 - 1) * 50) = $1,850
Additional paid-in capital would therefore decrease when the shares are reacquired.
