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: Purchased 1,000 shares of treasury stock-common at $ 10 per share.

Sold 900 shares of treasury stock--common at $ 18 per share.

Journalize

5 answers

To journalize the purchase and sale of treasury stock, you will need to record the transactions in the accounting records. Here are the journal entries for both the purchase and the sale:

1. Purchase of Treasury Stock

When you purchase treasury stock, you debit the Treasury Stock account and credit Cash.

Journal Entry for Purchase:

Date          Account Title                  Debit        Credit
YYYY-MM-DD    Treasury Stock                $10,000
              Cash                                        $10,000
(1,000 shares x $10 per share)

2. Sale of Treasury Stock

When selling treasury stock, you will need to record the cash received and adjust the Treasury Stock account. If sold at a gain, the excess over the cost goes into Additional Paid-In Capital (APIC) - Treasury Stock.

Journal Entry for Sale:

Date          Account Title                  Debit        Credit
YYYY-MM-DD    Cash                          $16,200
              Treasury Stock                $8,100
              Additional Paid-In Capital    $8,100
(900 shares sold at $18 per share, cost per share is $10)

Calculation for Sale:

  • Cash received from the sale: 900 shares × $18 = $16,200
  • Cost of treasury stock sold: 900 shares × $10 = $9,000
  • Gain on sale: Cash received - Cost = $16,200 - $9,000 = $7,200

Summary:

  • You purchase 1,000 shares at $10 each, totaling $10,000.
  • You sell 900 shares at $18 each, totaling $16,200. Since the cost of those shares is $9,000, you recognize a gain that will be recorded in Additional Paid-In Capital.

This journalization assumes there are no changes in stock value due to different accounting regulations. Adjust entries as needed based on your company's accounting policies.

Sold 100 shares of treasury stock--common at $ 5 per share.

Journalize

To journalize the sale of 100 shares of treasury stock at $5 per share, you will need to record the cash received and adjust the Treasury Stock account. Depending on the cost of the treasury stock previously recorded, you may also need to account for a loss or a gain.

Example Scenario

For the sake of this example, let's assume that the cost of the treasury stock purchased was $10 per share (as in the previous example) and that we are still within a scenario where we have not sold any shares that would change the total cost basis of our treasury stock.

If the cost per share of the treasury stock is $10, the journal entries would look like this:

1. Sale of Treasury Stock

Journal Entry for Sale:

Date          Account Title                  Debit        Credit
YYYY-MM-DD    Cash                            $500
              Loss on Sale of Treasury Stock $500
              Treasury Stock                $1,000
(100 shares sold at $5 per share, cost per share is $10)

Breakdown of the Entry:

  1. Cash:

    • 100 shares sold at $5 = $500

  2. Treasury Stock:

    • The cost of the treasury stock sold: 100 shares × $10 = $1,000

  3. Loss on Sale of Treasury Stock:

    • Since you sold the shares for less than the purchase price, you have a loss: $1,000 (cost) − $500 (cash received) = $500 loss.

Important Note:

If the cost price of treasury stock was different, such as previously recorded at a lower price than $5 (for instance, $4 or any lower amount), then there would be no loss incurred from the sale. Adjust the journal entry accordingly based on the actual purchase price of the treasury stock sold.

Make sure to replace "YYYY-MM-DD" with the actual date of the transaction. If your accounting policy does not specifically require a separate "Loss on Sale of Treasury Stock" account, you may just debit the Treasury Stock account for the cost and credit Cash without recognizing a loss explicitly, but it is typically good practice to show the loss when one occurs.

No, journalize it with credits and debits

Certainly! Below is the journal entry for the sale of 100 shares of treasury stock at $5 per share, clearly showing debits and credits.

Journal Entry for Sale of 100 Shares of Treasury Stock

Assuming the cost of the treasury stock is $10 per share, the journal entry would be:

Date          Account Title                        Debit        Credit
YYYY-MM-DD    Cash                                  $500
              Loss on Sale of Treasury Stock       $500
              Treasury Stock                                    $1,000

Explanation of the Entry:

  1. Cash:

    • Debit Cash for $500 (100 shares x $5 per share).

  2. Loss on Sale of Treasury Stock:

    • Debit Loss on Sale of Treasury Stock for $500 (this accounts for the loss since the treasury stock was originally purchased for $10 per share, resulting in a total cost of $1,000 for 100 shares).

  3. Treasury Stock:

    • Credit Treasury Stock for $1,000 (100 shares at cost of $10 per share).

Summary:

  • This entry reflects the sale of treasury stock at a price lower than its cost, resulting in a loss. If the cost of the shares sold is different, please adjust accordingly. Make sure to replace "YYYY-MM-DD" with the actual transaction date when entering the journal.