Question

Dilution Solutions, Inc. repurchased 1,000 shares of its $1 par value common stock for $5,000. The journal entry to record this transaction includes a $5,000 to Treasury Stock.

Answer 1

The journal entry to record this transaction includes a $5,000 DEBIT to Treasury Stock.

Step-by-step explanation:

The journal entry for this transaction should be:

• Dr Treasury Stock account 5,000
• Cr Cash account 5,000

Treasury stock is a contra asset account, therefore when it increases, it should be debited.

Cash is an asset account, therefore when it deceases, it should be credited.