Assume That the Stockholders’ Equity Section of Cherokee Company’s Balance

Essay

Assume that the Stockholders’ Equity section of Cherokee Company’s balance sheet on December 31, 2017, appears as follows:
$$\begin{array} { l r } \text { Common stock, } \$ 10 \text { par value, } 1,500 \text { shares issued and outstanding } & \$ 15,000 \\\text { Additional paid-in capital-common } & 17,000 \\\text { Retained eamings } & \underline{11,000} \\\text { Total stockholders' equity } & \underline{ \$ 43,000} \\\end{array}$$
1.If on February 1,2018,Cherokee buys 120 of its shares as treasury stock at $30 per share,determine the impact of this transaction on the accounting equation.
2.How will the Stockholders' Equity section of Cherokee's balance sheet appear on February 1,2018,after the purchase of the treasury stock?