Question

In January 2020, Sunland Company, a newly formed company, issued 11600 shares of its $10 par common stock for $15 per share. On July 1, 2020, Sunland Company reacquired 1160 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares decreased the number of issued shares. decreased total stockholders' equity. did not change total stockholders' equity. increased total stockholders' equity.

Answer 1

Answer: decreased total stockholders' equity.

Explanation:

First and foremost, we have to understand that the treasury stock account is regarded as contra entity account.

Therefore, with regards to the reacquisition of these treasury shares, thus will lead to a reduction in the total stockholders' equity.