Ross Corporation reported the following equity section on its current balance sheet: Which of the following would be included in the entry to record the corporation's purchase of 100,000 shares of its common stock for $7.50 per share?

Question

Ross Corporation reported the following equity section on its current balance sheet:  Which of the following would be included in the entry to record the corporation's purchase of 100,000 shares of its common stock for $7.50 per share?

Quizplus · Accepted Answer

When a company purchases its own shares, it records the transaction by debiting Treasury Stock-Common for the cost of the shares purchased. In this case, 100,000 shares were purchased for $7.50 per share, resulting in a debit of $750,000 to Treasury Stock-Common. The corresponding credit would be to Cash for $750,000. There would be no impact on Paid-In Capital, Retained Earnings, or Common Stock-$5 Par Value.

Ross Corporation Reported the Following Equity Section on Its Current