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Under the cost method, a corporation purchases 1,000 treasury shares at $45 per share. What is the debit to the treasury shares account?
A$10,000
B$45,000
C$45
D$1,000
Answer & Solution
Correct answer: B. $45,000
1. Treasury shares are recorded at cost: number of shares × purchase price.
2. Shares = 1,000; price = $45.
3. $1{,}000 \times \$45 = \$45{,}000$.
4. Par value plays no part in the treasury share entry, so the debit is $45,000.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §6.4 "Treasury Stock", p.251_
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