Treasury Stock Par Value Method
Definition: Repurchased shares at par
Scope:NarrowDifficulty:Difficult
Repurchased shares at par
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Buy back shares | ||
| Repurchase 1,000 shares ($1 par, originally issued at $15) at $14. | ||
| Treasury StockContra Equity+ | $1,000 | |
| Additional Paid-In CapitalEquity− | $14,000 | |
| CashAsset− | $14,000 | |
| Additional Paid-In Capital — Treasury | $1,000 | |
| Par value method removes original APIC. Paid less → APIC credit. | ||
| 2. Retire treasury shares | ||
| Retire 1,000 shares of treasury stock. | ||
| Common StockEquity− | $1,000 | |
| Treasury StockContra Equity− | $1,000 | |
| Shares formally cancelled; authorized but no longer outstanding. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Treasury StockTreasury StockAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$1,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$1,000.00
$0.00
Additional Paid-In CapitalAdditional Paid-In CapitalEquityThe owner’s residual interest in the business. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$14,000.00
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
Normal bal. ▶
$14,000.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$14,000.00
$14,000.00
Additional Paid-In Capital — TreasuryAdditional Paid-In Capital — TreasuryAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$1,000.00
$1,000.00
Common StockCommon StockEquityThe owner’s residual interest in the business. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$1,000.00
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
Normal bal. ▶
$1,000.00
DurationLong-Term
External Links
- Treasury stock — Wikipedia