What is the journal entry to record treasury stock under the cost method?
Under the cost method, if the company repurchased 5,000 shares at $16 per share, the company would debit treasury stock for $80,000 and credit cash for $80,000.
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What is reported in the financing section of the cash flow statement?
The financing section includes activities related to debt or equity activities. This would include issuing common stock, issuing preferred stock, treasury stock, dividend payments, issuing bonds, issuing notes, and payment of principal of debt.
What is treasury stock?
Treasury stock represents stock that was outstanding stock and was reacquired by the company. Treasury stock reduces the number of shares outstanding.
When a company repurchases outstanding common stock, where would the repurchase cost be recorded in the cash flow statement?
When a company repurchased or reacquires their own common stock, that represents a cash outflow. That stock would now be considered treasury stock since the company owns their own stock (reduces the equity owned by shareholders). Any purchase of treasury stock or subsequent reissuance would be recorded in the financing section of the cash flow […]