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 1 year ago

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