Kellogg, Inc. purchased 200 shares of its own $20 par value stock for $30 cash per share. Which of the following answers reflects how this purchase of treasury stock would affect Kellogg's financial statements?

Question

Quizplus · Accepted Answer

Cash decreases by $6,000 (200 × $30) and treasury stock increases by $6,000. Treasury stock is a contra-equity account; as a result, equity decreases. The cash outflow is reported as a financing activity.