Ross Corporation reported the following equity section on its current balance sheet: Which of the following would occur if the corporation purchased 15,000 shares of its common stock for $9.50 per share?

Question

Ross Corporation reported the following equity section on its current balance sheet:  Which of the following would occur if the corporation purchased 15,000 shares of its common stock for $9.50 per share?

Quizplus · Accepted Answer

When a corporation purchases its own stock, the common stock and additional paid-in capital accounts are reduced by the cost of the shares purchased. In this case, the cost would be $142,500 (15,000 shares x $9.50 per share), therefore reducing stockholders' equity by the same amount.

Ross Corporation Reported the Following Equity Section on Its Current