Question

On November 12, 2013, Berube Co. repurchased 10,000 shares of its own stock at a price of $20 per share. Berube had originally issued the stock in 2010 at a price of $15 per share.Which of the following items would be decreased by the stock repurchase transaction? (check all that apply)a. Total Shareholders Equity.b. Total Assets.c. Cash from Financing Activities.d. Total Liabilities.e. Accumulated Other Comprehensive Income.

Answer 1

Answer:

Berube Co.

The items that would be decreased by the stock repurchase transaction are:

b. Total Assets.

c. Cash from Financing Activities.

Explanation:

a) Data and Calculations:

November 12, 2013: Repurchase of 10,000 shares at a price of $20 per share = $200,000 (10,000 * $20)

b) The treasury stock repurchase decreases the cash from financing activities by $200,000.  This also reduces the Total Assets in the form of cash used in the repurchase.  The opposite becomes the case when treasury stock is sold.  Cash from financing activities is increased just as the Total Assets are increased.