Ross Corporation reported the following equity section on its current balance sheet:
$$\begin{array} { | l | r | }
\hline \begin{array} { l }
\text { Common stock, } \$ 5 \text { par, } 140,000 \text { shares authorized, } 50,000 \text { shares } \
\text { issued }
\end{array} & \$ 250,000 \
\hline \text { Paid in capital in excess of par-common } & 200,000 \
\hline \text { Retained earnings } & 207,000 \
\hline \text { Total stockholders' equity } & \$ \underline { 657,000 } \
\hline
\end{array}$$
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Which of the following would be included in the entry to record the corporation's purchase of 10,000 shares of its common stock for $7.50 per share?

Question

Ross Corporation reported the following equity section on its current balance sheet:
$$\begin{array} { | l | r | } 
\hline \begin{array} { l } 
\text { Common stock, } \$ 5 \text { par, } 140,000 \text { shares authorized, } 50,000 \text { shares } \
\text { issued }
\end{array} & \$ 250,000 \
\hline \text { Paid in capital in excess of par-common } & 200,000 \
\hline \text { Retained earnings } & 207,000 \
\hline \text { Total stockholders' equity } & \$ \underline { 657,000 } \
\hline
\end{array}$$
-
Which of the following would be included in the entry to record the corporation's purchase of 10,000 shares of its common stock for $7.50 per share?

Quizplus · Accepted Answer

When a corporation purchases its own stock, it records the transaction by debiting the treasury stock account for the total cost of the shares purchased. In this case, 10,000 shares at $7.50 per share equals $75,000, so treasury stock would be debited for $75,000.

Ross Corporation Reported the Following Equity Section on Its Current