Description: With petroleum prices on the upswing, Suncor Energy is rewarding its shareholders by doubling its quarterly dividend. Early in the pandemic, Suncor reduced its dividend by 50%, but with an operating income of over $1 billion in the latest quarter, the energy producer saw this as a good time to put cash back in the shareholders’ hands. Suncor has also been engaged in buying back shares from its shareholders, with estimates that up to seven percent of the shares may be repurchased by the company.
Date: October 28, 2021
1) Do you or any of your classmates own shares in a public company?
2) Why would a company such as Suncor be interested in repurchasing shares?
3) Starting on page 11-9 in Wiley’s Financial Accounting: Tools for Business Decision-Making, you will find a section dealing with the repurchase of common shares. What will the journal entry look like if the shares are bought back at a price above their average cost?