Treasury stock is a contra-equity account. It is not treated as an asset, because a company cannot legally invest in its own stock. Rather, treasury stock is presented on the balance sheet, where it reduces the total amount of owner’s equity. If the shares are purchased with another asset (for example, land instead of cash), that asset account should be credited instead.
You will list the sale amount minus the additional paid-in capital as a credit for that amount marked “treasury stock. " Reselling the 10,000 shares in the example from step one at $17 per share would mean you would notate the resale as a cash debit in the amount of $170,000, along with an additional paid-in capital credit of $20,000 and a treasury stock credit of $150,000.
If your 10,000 shares of stock from the example in step one had a par value of $1 each, you would notate that as “common stock, $1 par value” along with a debit in the amount of $10,000. You would list the amount paid above the par value as an additional paid-in capital debit, which would mean $140,000 for the example in step one. You would need to notate a treasury stock credit in the full amount, which would be $150,000 for the 10,000 share example. [4] X Research source
Since the 10,000 shares in the example were originally sold at $12 per share, the additional paid-in capital debit amount would be $110,000. The remaining $30,000 from the 10,000 shares bought back at $15 per share will be notated as a retained earnings debit. Finish the notation with a cash credit in the full amount—the example would be a cash credit of $150,000.
