Treasury StockTransactions

Blue Moon Water Supply Inc. bottles and distributes spring water. On July 17 of the current year, Blue Moon Water Supply reacquired 5,600 shares of itscommon stockat $89 per share.

1.What is the balance of Treasury Stock on December 31 of the current year?

$

2.Where will the balance of Treasury Stock be reported on the balance sheet?

a.In the asset section, as an investment

b.In the liability section as payable

c.In the stockholders' equity section as a dividend

d.In the stockholders' equity section as a reduction

3.All of the following are reasons that Blue Moon Water Supply may have purchased the treasury stock except:

a.to support the market price of the stock.

b.to provide shares for resale to employees.

c.for reissuance to employees as a bonus according to stock purchase agreements.

d.to increase assets.