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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

The treasury stock in Discussion Question 7 is resold for $5,750,000.

  1. a. What is the effect on the corporation's revenue of the period?
  2. b. What is the effect 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 reselling the repurchased stock at $3,750,000 on the revenue of the corporation.

Explanation

When the repurchased stock of $3,000,000 is resold at $3,750,000, the transaction is recorded as debit cash for $3,750,000 and cred...

b.

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

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