Sheridan Company had the following stockholders’ equity accounts on January 1, 2020: Common Stock ($5 par)...

Sheridan Company had the following stockholders’ equity accounts on January 1, 2020: Common Stock ($5 par) $514,500, Paid-in Capital in Excess of Par—Common Stock $181,440, and Retained Earnings $103,110. In 2020, the company had the following treasury stock transactions.

Mar. 1			Purchased 5,850 shares at $8 per share.
June. 1			Sold 1,120 shares at $12 per share.
Sept. 1			Sold 1,320 shares at $11 per share.
Dec. 1			Sold 1,180 shares at $6 per share.

a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2020, for net income.

b) Open accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and (3) Retained Earnings. (Post to T-accounts.) (Post entries in the order of journal entries presented in the previous part.)

c) Prepare the stockholder's equity section at Dec 31, 2020

Expert Solution

a)

Date	Account Titles	Debit	Credit
Mar-01	Treasury Stock	$ 46,800		=5850*8
	Cash		$ 46,800

Jun-01	Cash	$ 13,440		=1120*12
	Treasury Stock		$ 8,960	=1120*8
	Paid in Capital from Treasury Stock		$ 4,480	=13440-8960

Sep-01	Cash	$ 14,520		=1320*11
	Treasury Stock		$ 10,560	=1320*8
	Paid in Capital from Treasury Stock		$ 3,960	=14520-10560

Dec-01	Cash	$ 7,080		=1180*6
	Paid in Capital from Treasury Stock	$ 2,360		=9440-7080
	Treasury Stock		$ 9,440	=1180*8

b)

Treasury Stock
Mar-01	$ 46,800	$ 8,960	Jun-01
		$ 10,560	Sep-01
		$ 9,440	Dec-01

Bal	$ 17,840

Paid in Capital from Treasury Stock
Dec-01	$ 2,360	$ 4,480	Jun-01
		$ 3,960	Sep-01


		$ 6,080	Bal

Retained Earnings
		$ 103,110	Bal



		$ 103,110	Bal

c)

Stockholder's Equity
Paid in Capital
Common Stock	$ 514,500
Paid in Capital in Excess of Par - Common Stock	$ 181,440
Paid in Capital from Treasury Stock	$ 6,080
Total Paid in Capital	$ 702,020
Retained Earning	$ 103,110
Sub Total	$ 805,130
Less Treasury Stock	$ -17,840
Total Stockholder's Equity	$ 787,290

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