Treasury stock



Q34. Treasury stock
On December 1, 20×1, Entity A purchased 6,000 shares of its own common stock at $25 per share. Par value of common stock is $1 per share.
Prepare a journal entry to record this transaction.

A34. Increase in treasury stock is recorded on the debit side.

  Debit Credit
Treasury stock 150,000  
     Cash   150,000

[Note]
1. On the balance sheet, treasury stock is reported as a subtraction from stockholders’ equity.
2. Treasury stock is a contra-equity account.
3. Treasury stock amount = 6,000 shares x $25 per share = $150,000

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