361 – Treasury Stock

Net Worth

Synopsis

Account 361

Debits

Credits

  1. The cost of retailer stock purchased back and held by the retailer (corporation).

  1. The cost of treasury stock sold.

 

 

Remarks:

Par or stated value is ignored when recording Treasury Stock transactions.  Any gain or loss on the sale of Treasury Stock is recorded in Account 365 - Additional Paid in Capital.

 

Although there are some legal restrictions on the practice, corporations may in general purchase shares of their own stock from stockholders.  There are various reasons why a corporation may buy its own stock, e.g., it may want to provide shares for purchase by a new officer in the company, or for re-issuance to employees as a bonus or to provide shares for resale to key staff.  It is important that each Treasury Stock transaction be supported with details of the transaction and recorded in the corporate minutes and register.

Note: