Principles of Financial Accounting · free preview
Recording the Issuance and Repurchase of Stock
Stock transactions beyond initial issuance include no-par stock, stock issued for services, and treasury stock repurchases, where the corporation buys back its own shares and holds them for reissue or retirement.
1. Variations on issuance
Variations on issuance
2. Why companies repurchase stock
Why companies repurchase stock
3. Recording treasury transactions
Recording treasury transactions
4. Retiring treasury shares
Retiring treasury shares
5. Treasury stock nature
How is treasury stock classified on the balance sheet?
6. No gain or loss on repurchase
A company reissues treasury stock above its cost. Where does the difference go?
7. Reissue below cost ordering
Treasury stock costing 18,000 dollars is reissued for 15,000 dollars, and paid-in capital from treasury stock already holds a 2,000 dollar credit balance. What is the entry treatment of the 3,000 dollar shortfall?
8. Treasury share status
Which rights do treasury shares carry while held by the issuing corporation?
9. Treasury buyback entry
A company repurchases 1,000 shares at 18 dollars each. Compute the debit to treasury stock in dollars, number only.
10. Reissue above cost credit
Treasury shares costing 18,000 dollars are reissued for 22,000 dollars. Compute the credit to paid-in capital from treasury stock in dollars, number only.
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