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13 February, 07:49

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.

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  1. 13 February, 08:50
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    decreased total equity by $14,400

    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)
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