ABC Company Made a $2,500 Payment on Account, to Satisfy

question 38

Essay

ABC Company made a $2,500 payment on account, to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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Definitions:

Reverse Stock Split

A corporate action in which a company decreases the number of its existing shares, which increases the share price proportionally, often done to meet stock exchange listing requirements.

Equity

The value of ownership interest in a company, calculated as the difference between its assets and liabilities.

Share Repurchase

A program by which a company buys back its own shares from the marketplace, reducing the amount of outstanding stock.