On October 10, the stockholders’ equity of Sherman Systems appears as follows.


Common stock–$10 par value, 84,000 shares authorized, issued, and outstanding	$	840,000
Paid-in capital in excess of par value, common stock		276,000
Retained earnings		960,000
Total stockholders’ equity	$	2,076,000

1. Prepare journal entries to record the following transactions for Sherman Systems.

Purchased 6,200 shares of its own common stock at $37 per share on October 11.
Sold 1,300 treasury shares on November 1 for $43 cash per share.
Sold all remaining treasury shares on November 25 for $32 cash per share.

Solutions

Expert Solution

1	a.	Treasury stock	229,400
		Cash		229,400

2	b.	Cash	55,900
		Treasury stock		48,100
		Paid-in capital, treasury stock		7,800

3	c.	Cash	156,800
		Paid-in capital, treasury stock	7,800
		Retained earnings	16,700
		Treasury stock		181,300

Explanation

Treasury stock (6,200 shares × $37) = $229,400
Cash (1,300 × $43) = $55,900
Treasury stock (1,300 shares × $37) = $48,100
Cash (4,900 × $32) = $156,800
Treasury stock (4,900 shares × $37) = $181,300

Treasury stock (6,200 shares × $37) = $229,400

Robert Otieno answered 2 years ago

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