Question
Colwyn Instruments has ordinary shares of $1 nominal value and a share premium balance of $180,000. It holds no treasury shares at the start of 2026. During 2026:
- Mar 1 — bought back 20,000 of its own shares at $6 each, to hold as treasury shares.
- Jul 1 — reissued 12,000 of the treasury shares at $8 each.
- Oct 1 — reissued 4,000 of the treasury shares at $5 each.
Colwyn records treasury shares at cost and takes differences on reissue to share premium.
Required:
- Journal Entries — all three transactions. Use Cash, Treasury Shares and Share Premium.
- Treasury Shares Balance — the balance on the Treasury Shares account at December 31, 2026.
- Effect of the July Reissue — the effect of the July 1 reissue on the financial statements.
Statements in this challenge
- Journal EntriesJournal Entry
- Treasury Shares BalanceNumeric Answer
- Effect of the July ReissueStatement Impact
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 and IAS 32 — presentation of equity
Split every share issue between the nominal or par amount and the excess received. The nominal amount goes to share capital and the excess to share premium; these are presented separately and are not interchangeable.
Common mistakes
- Posting the entire proceeds of an issue to share capital and omitting share premium.
- Treating preference shares that carry a mandatory redemption as equity when their substance is a liability.
- Recording share issue costs as an expense rather than against equity.
Further readingPreparing a balance sheet step by step