In: Accounting
On October 10, the stockholders’ equity of Sherman Systems
appears as follows.
Common stock–$10 par value, 87,000 shares authorized, issued, and outstanding |
$ | 870,000 | |
Paid-in capital in excess of par value, common stock | 291,000 | ||
Retained earnings | 984,000 | ||
Total stockholders’ equity | $ | 2,145,000 | |
1. Prepare journal entries to record the following
transactions for Sherman Systems.
2. Prepare the revised equity section of its
balance sheet after the October 11 treasury stock
purchase.
Journal entries: | ||||||
S.no. | Accounts title and explanation | Debit $ | Credit $ | |||
a. | Treasury stock (6500*40) | 2,60,000 | ||||
Cash account | 2,60,000 | |||||
(for treasury stock purchased) | ||||||
b. | Cash account (1375*46) | 63250 | ||||
Treasury stock (1375*40) | 55000 | |||||
Paid in capital-Treasury stock | 8250 | |||||
(for resale of treasury stock at gain) | ||||||
c. | Cash account (5125*35) | 179375 | ||||
Paid in capital-treasury stock | 8250 | |||||
Retained earnings | 17375 | |||||
Treasury stock (5125*40) | 205000 | |||||
(for resale of treasury stock) | ||||||
Equity Section after Oct11. | ||||||
Common Stock (87,000 shares @10) | 8,70,000 | |||||
Paid in capital in excess of par value | 2,91,000 | |||||
Retained earnings | 9,84,000 | |||||
Total Paid in capital | 21,45,000 | |||||
Less: Treasury stock (6500*40) | -2,60,000 | |||||
Total Stockhodler's equity | 18,85,000 | |||||