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Treasury Stock Contra-Equity Journal Entry On the cash flow statement, the share repurchase is reflected as a cash outflow (?use? of cash). After a repurchase, the journal entries are a debit to treasury stock and credit to the cash account.
Treasury stock is usually a corporation's previously issued shares of common stock that have been purchased from the stockholders, but the corporation has not retired the shares.
Treasury Stock is a contra equity item. It is not reported as an asset; rather, it is subtracted from stockholders' equity. The presence of treasury shares will cause a difference between the number of shares issued and the number of shares outstanding.
Purchase: The journal entry is to debit treasury stock and credit cash for the purchase price. For example, if a company buys back 10,000 shares at $5 per share, the amount debited and credited is $50,000 (10,000 x $5).
When a business buys back its own shares, these shares become ?treasury stock? and are decommissioned. In and of itself, treasury stock doesn't have much value. These stocks do not have voting rights and do not pay any distributions.
When treasury stock is purchased, the number of shares issued remains unchanged, but the number of shares outstanding decreases. When treasury stock is purchased, the Treasury Stock account is debited for the number of shares purchased times the purchase price per share.
The journal entry for additional capital invested in the form of new stock would depend on the specific details of the transaction. In general, though, the journal entry would involve a credit to the capital stock account and a debit to the cash account.
Assets decrease and stockholders' equity decreases. As a result of this entry, the assets reduce and also the stockholders' equity.