Treasury stock : Treasury stock is the shares bought back by the company itself. A company may purchase its own shares and the shares bought back are called treasury stock. The journal entries are made at the time of sale and purchase of treasury stock as follows: For Purchase of treasury stock: Treasury stock account is debited and cash account is credited with the cost of treasury stock purchased. For Sale / Reissuance of treasury stock: Cash account is debited for the amount received on sale of treasury stock and the Treasury stock account is credited with the cost of treasury stock. For the difference in cost and sale value, Additional Paid in Capital and Retained earnings accounts are adjusted. To indicate: The four reasons for company to buy its own stock.
Treasury stock : Treasury stock is the shares bought back by the company itself. A company may purchase its own shares and the shares bought back are called treasury stock. The journal entries are made at the time of sale and purchase of treasury stock as follows: For Purchase of treasury stock: Treasury stock account is debited and cash account is credited with the cost of treasury stock purchased. For Sale / Reissuance of treasury stock: Cash account is debited for the amount received on sale of treasury stock and the Treasury stock account is credited with the cost of treasury stock. For the difference in cost and sale value, Additional Paid in Capital and Retained earnings accounts are adjusted. To indicate: The four reasons for company to buy its own stock.
Solution Summary: The author explains that Treasury stock is the shares bought back by the company itself. The journal entries are made at the time of sale and purchase of treasury stock.
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
Chapter 10, Problem 19DQ
To determine
Concept introduction:
Treasury stock:
Treasury stock is the shares bought back by the company itself. A company may purchase its own shares and the shares bought back are called treasury stock. The journal entries are made at the time of sale and purchase of treasury stock as follows:
For Purchase of treasury stock:
Treasury stock account is debited and cash account is credited with the cost of treasury stock purchased.
For Sale / Reissuance of treasury stock:
Cash account is debited for the amount received on sale of treasury stock and the Treasury stock account is credited with the cost of treasury stock. For the difference in cost and sale value, Additional Paid in Capital and Retained earnings accounts are adjusted.
To indicate:
The four reasons for company to buy its own stock.
Define the term "treasury stock." What are the reasons for a company to purchase treasury stock? What is the accounting treatment of treasury stock on the balance sheet?
1. What is treasury stock and what type of account is it?
21. What does IAS 32 provide as regards to the gain from sale of treasury shares?
Group of answer choices
a. It shall be recognized in profit or loss.
b. It shall be credited to share premium.
c. It shall be credited to share capital.
d. It shall be credited to retained earnings.
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