Question - The company repurchased stock (per agreements with early stage investors) for $290. The stock was not canceled but was held in the Treasury. This will give rise to a negative balance in the Treasury stock account equal to the cost of the buy-back.
a. Hint: Firms hold their own stock in a Treasury account (called Treasury Stock) when the have repurchased it but plan to reissue it in the future. A common reason that the repurchased stock is held in the Treasury Stock account is that it will be reissued as a part of equity compensation (in future transactions similar to #6 above). Treasury stock is a contra-equity account-it reduces the total Stockholders' Equity.
How is this displayed on Balance Sheet and Statement of Cash Flows?