Journal Entries of Treasury Stock

Treasury stock is the stock which is bought by company from his shareholders from his excess money. It is asset of company which no outside liability. Following journal entries will pass when a company buy treasury stock.

1. When Company Buys the Treasury Stock

Treasury Stock Account Debit

Cash Account / Bank Account Credit

Treasury stock is the asset of company. It is new bought. So, it will be debit. It has decreased the fund of company. So, cash or bank balance has decreased. So, it will credit. For example, company has bought own shares of 100 @ Rs. 100 per share.

Treasury Stock Account Debit 10000

Bank Account Credit 10000

2. When Company Sells his Treasury Stock at profit

Cash Account / Bank Account Debit

Treasury Stock Account Credit

Paid Up Capital Account Credit

When company will sells his treasury stock asset, company's cash or bank balance will increase with sale value. So, cash and bank account will debit and treasury stock asset will decrease. So, it will credit. Company's paid up capital will increase which is the liability of company. So, it will credit. Whole profit will go to this paid up capital account.  For example, company sells 50 shares @ 130 per share.,

Bank Account Debit  6500

Treasury Stock Account Credit 5000

Paid Up capital account Credit 1500

3. When Company Sells his Treasury Stock at Loss


Cash Account / Bank Account Debit

Paid Up Capital Account Debit

Treasury Stock Account Credit

Even treasury stock has sold on loss, still cash or bank account debit because it has increased with sale value. and paid up capital account will debit with loss in this deal. Treasury stock account credit because this asset has decreased after sale to other shareholders.

For example 50 treasury stock sold at Rs. 90 per share

 Bank Account Debit 4500

Paid Up Capital Account Debit 500

Treasury Stock Account Credit 5000


Related 

• Objectives of Treasury Management
• Treasury Management and its Functions