Rakish Co Purchases 3,500 Shares of Its Own $1 Par Value

question 71

Multiple Choice

Rakish Co. purchases 3,500 shares of its own $1 par value common stock for $80 per share. Which of the following is the correct journal entry to record this transaction?

• A) Debit Common stock $3,500, debit Paid-in capital $276,500 and credit Cash $280,000.
• B) Debit Cash $280,000, credit Common stock $3,500 and credit Paid-in capital $276,500.
• C) Debit Cash $280,000 and credit Treasury stock $280,000.
• D) Debit Treasury stock $280,000 and credit Cash $280,000.

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Definitions:

Discretionary Fiscal Policy

Discretionary fiscal policy involves government actions to influence economic activity through changes in taxation and spending policies, distinct from automatic fiscal stabilizers.

GDP

Gross Domestic Product represents the total value, in monetary terms, of all finished goods and services made within a country's boundaries over a defined period.

Unemployment Benefits

Financial payments given to individuals who have lost their jobs, intended to provide a source of income while they search for new employment.

Taxes on Earnings

Levies imposed by a government on individuals' or entities' income from work or investment.