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Repurchasing Stock into Treasury

Brian Krogol
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So we're going to focus on two transactions for Treasury stock first when we repurchase it from the public and then at a later date we might resell it at a different price. Right? So we're going to repurchase some of our shares from the open market and then later sell it back out to the open market. Let's start here with the repurchase entry. The apartment depot repurchased 10,000 shares of 50 cent par value, common stock at the current market price of $25. So when we do the cost method for dealing with Treasury stock, the par value doesn't method doesn't matter here. All we care about is how much did you spend to repurchase this stock? So we bought 10,000 shares At a price of $25. Well that's gonna come out to $250,000. Right? That's the amount we spent buying these shares and that's the value of the Treasury stock account. So like I said before Treasury stock is gonna have a debit balance right? It's contra equity. So we're gonna have the debit in this transaction. be Treasury stock. So our debit is the Treasury stock for 250,000. And what's gonna be our credit here? It's gonna be cash, right? We bought these shares with cash. So we got to get the cash off of our books with the credit. And that's going to be for the 250,000 that we spent. Pretty easy. Right, this almost looks like when we buy any sort of asset. But this is a little different because we're talking about lowering equity, right? So what did we see happen here? We saw that our cash lowered our assets by 250,000. But the other side, it's not that we bought an asset, like as if we bought machinery or bought some sort of investment, this is buying our own stock back. So we're gonna lower our equity. So the Treasury stock, I'm gonna put T stock is gonna lower equity by 250,000. And that's how our equation stays balanced here, Right? 250,000 less in equity. 250,000 less in assets. Cool. That journal entry is pretty easy. Let's go ahead and move on to the next one.