Answer and Explanation:
Caramel Corporation outstanding share are 5000
Caramel Corporation distributes $145,000 in an exchange for 1000 number of shares in a qualifying stock redemption.
Given : caramel Corportaion has E&P of around $300,000.
E&P attributable to 1000 number of shares = [tex]300000 * 1000 / 5000=\$ 60,000[/tex]
Therefore, the consequence of this redemption are $60,000 charge to E&P and reduction in caramel Corporation paid-in capital account is $85000 ($145000 subtract $60000)
