Business, 12.08.2020 22:01 triddi666

On October 10, the stockholders? equity of Sherman Systems appears as follows: Common stock?$10 par value, 72,000 $ 720,000
shares authorized, issued, and outstanding
Paid-in capital in excess of par value, common stock 216,000
Retained earnings 864,000
Total stockholders equity $ 1,800,000
Prepare journal entries to record the following transactions for Sherman Systems.
1a. Purchased 5,000 shares of its own common stock at $25 per share on October 11.
1b. Sold 1,000 treasury shares on November 1 for $31 cash per share.
1c. Sold all remaining treasury shares on November 25 for $20 cash per share.
2. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase.

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Answer from: BeeShyanne

Please find answers in explanation column

Explanation:

Common stock?$10 par value, 72,000

shares authorized, issued, and outstanding $ 720,000

Paid-in capital in excess of par value, common stock $216,000

Retained earnings $864,000

Total stockholders equity $1,800,000

a)journal entry to record the purchase of shares on Oct 11

Date Account Debit Credit

Oct 11 Treasury stock $125,000

Cash $125,000

Calculation

value of the Treasury stock=No.of shares×Value per share

=5,000×$25 =$125,000

b. journal entry to record the sales of treasury shares.

Date Account Debit Credit

Oct 11 Cash $31,000

Treasury stock $25,000

Paid in capital from the sale of the stock

(31,000 - 25,000) $6,000

Calculation

Cash =No.of shares×Value per share

=1,000×$31 =$31,000

Treasury stock=No.of shares× purchased value of share

=1,000×$25 =$25,000

1c)journal entry to record the sales of the remaining treasury shares

Date Account Debit Credit

Nov 1 Cash $80,000

Paid in capital from the sale of the stock $6,000

Retained earning $14,000

Treasury stock $100,000

Calculation

Remaining treasury shares = 5000-1000= $4000

Cash =No.of shares×Value per share

=4, 000× 20 =$80 ,000

Treasury stock=No.of shares× purchased value of share

=4,000×$25 =$100,000

recall paid in capital from sale = $6000

retained earnings = treasury stock - cash- paid in capital= 100,000- 80,000 - 6,000= $14,000

2) Revised equity of the balance sheet to show new total stockholders’ equity

Account /Particulars Amount

Common stock $ 720,000

Paid-in capital $216,000

Retained earnings $864,000

less Treasury stock ($125,000)

Balance $739,000

Total stockholders equity $1,675,000

Answer from: Quest

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

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