Treasury Stock Cost Method Journal Entries

In the US, when a business buys its own stock in the open market it is referred to as treasury stock.

The treasury stock cost method journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of treasury stock using the cost method.

In each case the treasury stock cost method journal entries show the debit and credit account together with a brief narrative. For a fuller explanation of journal entries, view our examples section.

Typical Treasury Stock Cost Method Journal Entries


Purchase of treasury stock
Account Debit Credit
Treasury stock XXX
Cash XXX

Sale of treasury stock at a profit
Account Debit Credit
Cash XXX
Treasury stock XXX
APIC* – treasury stock (profit) XXX

* APIC stands for Additional Paid in Capital


Sale of treasury stock at a loss
Account Debit Credit
Cash XXX
APIC – treasury stock (loss) XXX
Treasury stock XXX

Sale of treasury stock at a loss greater than APIC account balance
Account Debit Credit
Cash XXX
APIC – treasury stock (loss) XXX
Retained earnings (loss excess) XXX
Treasury stock XXX

Retirement of treasury stock
Account Debit Credit
Common stock XXX
APIC – Common stock XXX
Retained earnings (loss excess) XXX
Treasury stock XXX

Contra Equity Account

As the purchase of treasury stock is a debit to an equity account it is referred to as a contra equity account.

Note on terminology for treasury stocks journal entries
In the UK Treasury stocks refers to government issued bonds or gilts.

Last modified July 16th, 2019 by Michael Brown

About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.

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