___ 4. Deeper Company paid $42,000 to buy 4,000 shares of its $6 par value common stock for the treasury. The stock was originally issued for $50,000. The entry to record the purchase includes a:
A) debit to Treasury Stock for $42,000.
B) credit to Treasury Stock for $50,000.
C) debit to Treasury Stock for $50,000.
D) credit to Common Stock for $42,000.

Question

Quizplus · Accepted Answer

When a company buys its own stock for the treasury, the entry includes a debit to Treasury Stock for the amount paid to buy the shares. Therefore, the correct choice is A, which represents a debit to Treasury Stock for $42,000. Choices B and C are incorrect because the purchase price was $42,000, not the original issuance price of $50,000. Choice D is incorrect because there is no credit to Common Stock involved in the purchase of treasury stock.

___ 4 Deeper Company Paid $42,000 to Buy 4,000 Shares of of Its