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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

A corporation reacquires 60,000 shares of its own $10 par common stock for $3,000,000, recording it at cost.

  1. a. What effect does this transaction have on revenue or expense of the period?
  2. b. What effect does it have on stockholders’ equity?

a.

To determine

Treasury Stock

Treasury stock refers to the stock that a company repurchases its own issued stock to serve some specific purposes like gifting it to the employees, issue stock bonus or to support the market price of the stock.

To Determine: The effect of repurchase of 60,000 shares at $10 par common for $3,000,000 on revenue or the expense of the period of a corporation.

Explanation

When a corporation repurchases 60,000 shares at $10 par common for $3,000,000, the journal entry to record ...

b.

To determine
The effect the transaction has on stockholders’ equity.

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