Chen, Inc. purchases 1,000 shares of its own previously issued $5 par common stock for $12,000. Assuming

Question:

Chen, Inc. purchases 1,000 shares of its own previously issued $5 par for $12,000. Assuming the shares are held in the treasury, what effect does this transaction have on:
(a) Net income,
(b) Total assets,
(c) Total paid-in capital, and
(d) Total stockholders’ equity?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...