JournaldrillBuying treasury stock
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
Stonebridge Analytics Inc. buys back 3,000 shares of its own $1 par value common stock at $22 per share and holds them as treasury stock. It uses the cost method.
What this exercise teaches
Treasury Stock is debited for the cost, 3,000 x $22 = $66,000. Treasury Stock is a contra-equity account, not an asset.
A hint if you get stuck
Under the cost method the purchase is recorded at what was paid, and par value does not matter.
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