Question

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $57,500. As a result of this event,a. Kaplan's Common Stock account decreased $25,000.b. Kaplan's total stockholders' equity decreased $57,500.c. Kaplan's Paid-in Capital in Excess of Par Value account decreased $32,500.d. All of these answer choices are correct.

Answer 1

Answer:

b. Kaplan's total stockholders' equity decreased $57,500

Explanation:

The purchase of treasury stock is as follows:

Treasury Stock debit 57,500 (-Equity)

              cash             credit   57,500 (-Assets)

The company's equity decreased as well as the Assets.

The common stock and paid-in Capital in Excess of Par Value will not be modified.

This account will be decreased if the stocks are retired not at purchase