Treasury Stock (Par Value Method (5%) vs Cost Method (95%))

Question 1

In Treasury Stock transactions

Answer 1

Retained Earnings may be Debited but NEVER Credited.

If you need a Credit then you Credit APIC

Question 2

Original Issue Par/Legal and Cost Value Method

Answer 2

DR: Cash
CR: Common Stock
CR: APIC - Common Stock

Question 3

Buy Back above Issue Price - Par/Legal

Answer 3

DR: Treasury Stock (par)
DR: APIC - Common Stock
DR: Retained Earnings
CR: Cash

Question 4

Buy Back Below Issue Price

Answer 4

DR: Treasury Stock (par)
DR: APIC
CR: Cash
CR: APIC - Treasury Stock

Question 5

Reissue Shares above cost - Par Value vs Cost

Answer 5

DR: Cash
CR: Treasury Stock (par)
CR: APIC - Common Stock (Par value method)
CR: APIC - Treasury Stock (Cost method)

Question 6

Reissue shares below cost - Par vs Cost (same entries - different amounts)

Answer 6

DR: Cash
DR: APIC - Treasury Stock (for par value method $ is same as buy back below) (cost method $ is same as buy back above cost)
DR: Retained Earnings
CR: Treasury Stock