Hi,

I have a question regarding Treasury Stock.  When retiring treasury stock, we need to DR common stock @ par.  When resale treasury stock, there is no DR common stock @ par involved in the JE.  Why is that?  Thanks!!

When you are retiring treasury stock, it is basically like you are retiring just your typical common stock, so you need to get the common stock off the books because in essence it no longer exists.

Think of the J/E for the purchase of T-Stock:

Dr. T-Stock

Cr. Cash

All the purchase of T-Stock does is reduce the paid-in capital of the company, not "get rid of" the common stock.

When you are reselling treasury stock, the stock still exists.  You wouldn't debit common stock.  You essentially need to reverse the above entry and account for any APIC that may exist.  You would make the following entry:

Dr. Cash

Cr. T-Stock

Cr. APIC-T-Stock

Hope this helps~

Daniel,

Thank you so much.  That helps!!