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Treasury Shares
When a company repurchases its own shares with the intention to some day reissue them, the shares are kept in treasury.
About Treasury Shares
- Classified as a contra-account to shareholders' equity, account is titled Treasury Stock
- Often used for employee share-based compensation
- Does not affect any other equity account
How Treasury Shares are Reported
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Example: Treasury Shares
Premier LLC. has 200,000 outstanding $2 par value common shares that were issued for an average price of $24 per share. On April 12th, the company repurchased 10,000 shares for $40 each but did not retire then.
Prepare the journal entry to record the transaction.
Practice: Treasury Shares
The following partial balance sheet is available for Wizedemy Inc. as at December 31, 2020.
During 2020, the company repurchased 2,000 common shares for $9 each but did not retire the shares.
Prepare the journal entry to record the repurchase.
Transactions:
| Account | Debit | Credit |
|---|---|---|