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

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

  

Common stock–$10 par value, 76,000 shares
authorized, issued, and outstanding$760,000

Paid-in capital in excess of par value, common stock 236,000

Retained earnings 896,000

Total stockholders’ equity$1,892,000


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

Purchased 5,400 shares of its own common stock at $29 per share on October 11.

Sold 1,100 treasury shares on November 1 for $35 cash per share.

Sold all remaining treasury shares on November 25 for $24 cash per share.

2. Prepare the stockholders' equity section after the October 11 treasury stock purchase.

Solutions

Expert Solution

Journal entries
Date Accounts Name Debit Credit
11-Oct Treasury Stock ( 5400*29) 156600
Cash 156600
( being shares reacquired )
1-Nov Cash (1100*35) 38500
   Treasury Stock ( 1100 * 29 ) 31900
Additional paid in Capital- treasury stock                 ( 1100 * (35-29) ) 6600
25-Nov Cash (4300*24) 103200
Additional paid in Capital - trasury stock 6600
Additional paid in Capital - common stock 14900
   Treasury Stock ( 4300 * 29 ) 124700

LOSS ON NOV -25 Sale of treasury Stock

= ( 5400 - 1100 ) * ( 29-24 )

= 21500

balance sheet partial
october - 11th
Stock hoders equity Amount
common stock- $ 10 par value , 70600 shares issued and outstanding 7060000
paid in capital in excess of par value 236000
Reatained Earnings 896000
contributed Capital 8192000
less ; treasuty Stock ( 5400 Shares @ $29 ) 156600
total 8035400

ekkarill92 answered 3 years ago
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