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
| Account | Debit | Credit |
|---|---|---|
| Treasury stock | XXX | |
| Cash | XXX |
| Account | Debit | Credit |
|---|---|---|
| Cash | XXX | |
| Treasury stock | XXX | |
| APIC* – treasury stock (profit) | XXX |
* APIC stands for Additional Paid in Capital
| Account | Debit | Credit |
|---|---|---|
| Cash | XXX | |
| APIC – treasury stock (loss) | XXX | |
| Treasury stock | XXX |
| Account | Debit | Credit |
|---|---|---|
| Cash | XXX | |
| APIC – treasury stock (loss) | XXX | |
| Retained earnings (loss excess) | XXX | |
| Treasury stock | XXX |
| 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.