| We debit | ||
| John Doe | 50,000 | |
| We credit | ||
| Treasury stock | 50,000 |
and open an account with treasury stock in the stock ledger.
When treasury stock is sold—
| We debit | ||
| Treasury stock | 30,000 | |
| We credit | ||
| Subscribers | 30,000 |
When a stockholder sells a part or all of his shares to another it has no effect on capital stock or treasury stock accounts in the stock ledger. The only change takes place in the accounts of the individual stockholders involved. The stock transferred is debited to the account of the transferor, and credited to the account of the transferee.
Supposing that $30,000 treasury stock was purchased by Henry Benson, George Dennis, and Richard Carpenter, each purchasing $10,000, the stock ledger and stock register—if one is used—would appear as shown in the illustration. Footing the two sides of the stock register we find a balance of 1,300 shares which is the actual amount outstanding, the balance of 200 shares remaining in the treasury. A trial balance also shows that the stock ledger balances with a credit of $20,000 treasury stock.
Stock Ledger