Evergreen Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $115,000.As a result of this event,

Question

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When a company purchases its own common stock, it reduces its total stockholders' equity by the amount paid for the shares. Therefore, the correct option is B. Option A is incorrect because the Common Stock account is not affected by a stock buyback. Option C is incorrect because the decrease in the Paid-in Capital in Excess of Par account is only equal to the excess of the purchase price over the par value of the stock, which is not given in this case. Option D is incorrect because only option B is correct.

Evergreen Manufacturing Corporation Purchased 5,000 Shares of Its Own Previously