- What is treasury stock? Why do corporations purchase and issue treasury stock?
A treasury stock is a corporation’s own stock that it reacquired and still holds (Wild, Shaw, & Chiappetta, 2016). Corporations purchase and issue treasury stock to provide their employees the option to buy or have even been known to give these stocks as some form of incentive or bonus.
- How do you record the purchase of treasury stock? How does treasury stock affect the equity section of the balance sheet?
- How would you record the reissuance of treasury stock if the proceeds obtained are:
- At cost of the treasury stock?
- Less than the cost of the treasury stock?
- More than the cost of the treasury stock?
- What is the main difference between notes payable and bonds payable?
- What is the main difference between a bond and a share of stock?
- What does it mean to issue bonds at
- Par?
- Discount?
- Premium?
- What is the contract rate and the market rate for bonds?
- How do you compute total bond interest expense when a bond is sold at a discount? Explain your answer.
- How do you compute bond interest expense when a bond is sold at a premium? Explain your answer.
- What accounts are affected when recording the issue date of a discount bond? What accounts are affected when recording interest and amortization? Which accounts are credited and which accounts are debited when creating journal entries?
- What accounts are affected when recording the issue date of a premium bond? What accounts are affected when recording interest and amortization? Which accounts are credited and which accounts are debited when creating journal entries?
- What accounts are affected when a bond matures? Which accounts are credited and which accounts are debited when creating journal entries?