After being in business for several years and issuing its common stock to the public, Liquidation World,

Question:

After being in business for several years and issuing its common stock to the public, Liquidation World, Inc., completed the following treasury stock transactions:

a. Purchased 2,500 shares of the company's $2 par common stock as treasury stock, paying cash of $5 per share

b. Sold 1,000 shares of the treasury stock for cash of $11 per share

Requirements

1. Journalize these transactions. Explanations are not required.

2. What kind of account is Treasury Stock? After completing the two transactions, how should Liquidation World, Inc., report the treasury stock on its balance sheet?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....