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

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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