Question

Leary Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $115,000. As a result of this event,a. Leary's Common Stock account decreased $50,000.b. Leary's total stockholders' equity decreased $115,000.c. Leary's Paid-in Capital in Excess of Par Value account decreased $65,000.d. All of these answer choices are correct

Answer 1

Answer:

d. All of these answer choices are correct

Explanation:

As for the information provided, we have:

The share which are purchased by the company back from the market, which belong to the company, are called treasury stock.

For this under the par value method:

The balance of common stock is decreased by the par value of shares in the given case = $10 per share of 5,000 shares = $50,000

Also, the additional amount paid for purchasing back own shares more than the par value will decrease the additional paid in capital. Here, $115,000 - $50,000 = $65,000

Therefore, all the statements are true.