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Answer:
The statement that correctly describes the effects of the treasury stock purchase by the company is:
C. Stockholders' equity decreases $20,800.
Explanation:
A treasury stock purchase decreases stockholders' equity because a treasury stock represents a contra account to the stockholders' equity. When the value of the treasury stock is increased through a purchase, the treasury stock account increases while the common stockholders' equity decreases by the amount paid for the purchase.