The Lewing Company purchases 1,000 shares of its common stock for $20,000. The $20,000 amount should be debited to:
A) an asset account.
B) Treasury Stock.
C) Common Stock.
D) Retained Earnings.

Question

Quizplus · Accepted Answer

The purchase of the company's own stock results in a reduction in shareholder equity and is recorded as a contra-equity account called Treasury Stock. Therefore, the $20,000 should be debited to Treasury Stock.

The Lewing Company Purchases 1,000 Shares of Its Common Stock