___ 4 Deeper Company Paid $42,000 to Buy 4,000 Shares of of Its

question 14

Multiple Choice

___ 4. Deeper Company paid $42,000 to buy 4,000 shares of its $6 par value common stock for the treasury. The stock was originally issued for $50,000. The entry to record the purchase includes a:

• A) debit to Treasury Stock for $42,000.
• B) credit to Treasury Stock for $50,000.
• C) debit to Treasury Stock for $50,000.
• D) credit to Common Stock for $42,000.

---

Definitions:

Dividends Declared

Dividends declared are the portion of a company's earnings that the board of directors decides to distribute to shareholders.

Shareholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth attributable to shareholders.

Liabilities

Financial obligations or debts that a company owes to external parties or creditors.

Cash Dividend

A cash dividend is a payment made by a company out of its earnings to shareholders in the form of cash.