Assume that a company paid 15 per share to purchase 1300 sha

Assume that a company paid $15 per share to purchase 1,300 shares of its $1 par common stock as treasury stock. The purchase of treasury stock O A. increased total equity by $19,500. OB. increased total equity by $1,300. O C. decreased total equity by $1,300. O D. decreased total equity by $19,500

Solution

Journal:

Treasury stock a/c..Dr$19500($15*1300)

To cash $19500

Hence repurchase of common stock would decrease the equity balance by $19500.

Hence the correct option is D.