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