A corporation purchases 89000 shares of its own $30 par common stock for $47 per share, recording it at cost. What will be the effect on total stockholders’ equity? 1. Decrease by $4183000 2. Increase by $4183000 3. Increase by $2670000 4. Decrease by $2670000

A corporation purchases 89000 shares of its own $30 par common stock for $47 per share, recording it at cost. What will be the effect on total stockholders’ equity? 1. Decrease by $4183000 2. Increase by $4183000 3. Increase by $2670000 4. Decrease by $2670000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 12MCQ

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

A corporation purchases 89000 shares of its own $30 par common stock for $47 per share, recording it at cost. What will be the effect on total stockholders’ equity?

1. Decrease by $4183000

2. Increase by $4183000

3. Increase by $2670000

4. Decrease by $2670000

Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.

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