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 Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.
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?
12 -
What is the process of determining the optimal amount of stock that should be in the enterprise, taking into account production and sales ?
a)
Management of Securities
B)
Cash Assets Management
NS)
Fixed Assets Management
D)
Management of stocks
TO)
Management of Receivables
In some circumstances, corporations will buy back their own stock – called Treasury Stock. Identify three reasons why a company may choose to do so.
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