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 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:  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 is recorded as treasury stock and is debited for the cost of the shares. Therefore, the entry to record the purchase of 10,000 shares of its common stock for $7.50 per share would include a debit to Treasury stock for $75,000 (10,000 shares x $7.50 per share). The other options listed are not correct as they do not reflect the proper accounting treatment for the purchase of treasury stock.

Ross Corporation Reported the Following Equity Section on Its Current