Accounting for treasury stock (Learning Objective 6) 10–15 min.

Liquidation World, Inc., began operations in 2014. After 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?

AppendixLO1