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On October 10, the stockholders’ equity of Sherman Systems appears as follows.    Common stock–$10 par...

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

Common stock–$10 par value, 81,000 shares
authorized, issued, and outstanding		 $ 810,000
Paid-in capital in excess of par value, common stock 261,000
Retained earnings 936,000
Total stockholders’ equity $ 2,007,000


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

a. Purchased 5,900 shares of its own common stock at $34 per share on October 11.

b. Sold 1,225 treasury shares on November 1 for $40 cash per share.

c. Sold all remaining treasury shares on November 25 for $29 cash per share.

2. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase.

Solutions

Expert Solution

Date Title Debit Credit
Oct-11 Treasury Stock (5,900*$34) $ 200,600
Cash $ 200,600
(To record repurchase of 5900 own sahres)
Nov-01 Cash (1,225*$40) $    49,000
Treasury stock (1,225*$34) $    41,650
Paid in capital-Treasury Stock $      7,350
(To record sale 1225 shares from treasury stock)
Nov-25 cash (5,900-1,225)*$29) $ 135,575
Paid in capital-Treasury Stock $      7,350
Retained earnings $    16,025
Treasury stock (5,900-1,225)*$34) $ 158,950
(To record sale balance from treasury stock)

2.

Common stock–$10 par value, 81,000 shares
authorized, issued, and outstanding		 $     810,000
Paid-in capital in excess of par value, common stock $     261,000
Retained earnings $     936,000
Total paid in capital and retained earnings $ 2,007,000
Less: treasury Stock, 5,900 shares $   (200,600)
Total stockholders' equity $ 1,806,400

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ekkarill92 answered 3 years ago
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