Peter's Computers purchased 1000 shares of its own $3 par value common stock for $92,000.As a result of this transaction:
A)Peter's stockholders' equity increased $89,000.
B)Peter's stockholders' equity increased $3000.
C)Peter's stockholders' equity decreased $92,000.
D)Peter's stockholders' equity increased $92,000.

Question

Quizplus · Accepted Answer

When a company purchases its own stock, it is essentially using its assets to buy back equity from shareholders, which reduces the stockholders' equity by the amount spent on the buyback, in this case, $92,000.

Peter's Computers Purchased 1000 Shares of Its Own $3 Par