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

Question

Rebekah Harmon

Business

15 April, 15:33

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

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Answers (1)

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Bianca Ferrell · Answer 1

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.