The journal entry for the purchase of treasury stock includes a credit to Cash.

Question

Quizplus · Accepted Answer

The purchase of treasury stock results in a decrease in cash because the company is buying back its own shares. Therefore, the journal entry would include a debit to Treasury Stock and a credit to either Common Stock (for par value shares) or Paid-in Capital from Treasury Stock (for no-par or low-par value shares), but a credit to Cash would not be included.

The Journal Entry for the Purchase of Treasury Stock Includes