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General Accounting Discussions: Treasury Shares

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  1.  
    • CommentAuthorbelavia
    • CommentTimeApr 8th 2007
     
    What is the difference in the journal entry for buying back shares for treasury purposes vs. retiring them.
    As an example, assume a company buys back 1,000 shares at $5. Journal Entry is:
    DR Shares $5,000
    CR Cash $5,000
    What if now the company does not retire the shares but keeps them as treasury shares?

    Thank You
    • CommentAuthorAbusamak
    • CommentTimeApr 10th 2007
     
    we record treasury stock by cost method,and you must take the market price per share.
    if you want to purchase 1000 share with par value 1$ and market value of 5$ you shall record:
    Dr. treasury stock 5000
    Cr. cash 5000
    hent,
    their are no diffrence between retier and purchasing treasury stock.
    many goals for company retier stocks:
    1- dcrease the market shares of company stocks te icrease the stock price
    2- keep T.S. as a copensations for mangement
    good luck.

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