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25 January, 05:48

A corporation purchases 15,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity? a. Increase by $525,000. b. Decrease by $300,000. c. Decrease by $525,000. d. Decrease by $225,000.

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  1. 25 January, 08:15
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    Answer: Option (c) is correct.

    Explanation:

    Given that,

    A corporation purchases = 15,000 shares of its own $20 par

    Common stock = $35 per share

    Effect on total stockholders' equity:

    As purchase of own stock will reduce total stockholders equity by

    = Shares purchased * Per share price

    = 15,000 * $35

    = $525,000

    Therefore, total stockholders' equity decreases by $525,000.
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Home » Business » A corporation purchases 15,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity? a. Increase by $525,000. b. Decrease by $300,000. c. Decrease by $525,000. d.
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