Question

Assume that a company paid $ 9 per share to purchase 1 comma 600 shares of its $ 2 par common stock as treasury stock. The purchase of treasury stock.

Answer 1

decreased total equity by $14,400

Step-by-step explanation:

The treasury stock reduced the balance of the stockholder equity as the issuing company buys this stock back.

Given that

Number of shares purchased = 1,600 shares

Paid per share = $9

Common stock = $2

So, the treasury stock would be

= Number of shares purchased × per share

= 1,600 shares × $9

= $14,400

The journal entry would be

Treasury Stock A/c Dr $14,400

To Cash A/c $14,400

(Being treasure stock is purchased for cash)