Report /annual /the/ buying /red /was/ principal/we/ college/ the/ on/...... What is the correct sentence

The correct sentence is:

We were buying the annual report on the red college principal.

Explanation:

1. Subject and Verb: The subject is "We," and the action is "buying." Since "We" is plural, the past continuous tense requires "were buying." (The word "was" provided in your list would be grammatically incorrect with "We." Assuming it was a typo and should be "were" to form a correct sentence.)
2. Direct Object: "the annual report" is what was being bought.
3. Prepositional Phrase: "on the red college principal" describes the subject of the report (i.e., the report is about the principal of the red