Question

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

Common stock–$10 par value, 73,000 shares authorized, issued, and outstanding	$	730,000
Paid-in capital in excess of par value, common stock		221,000
Retained earnings		872,000
Total stockholders’ equity	$	1,823,000

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

1. Purchased 5,100 shares of its own common stock at $26 per share on October 11.
2. Sold 1,025 treasury shares on November 1 for $32 cash per share.
3. Sold all remaining treasury shares on November 25 for $21 cash per share.

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

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

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

	Revised Equity Section of Balance Sheet After October 11 Common stock, $10 par x Paid-in capital in excess of par value, common stock x Total contributed capital 0 Retained earnings x Total 0 Add: Cost of treasury stock x Total stockholders’ equity $

I need the values for x.

Answer 1

Requirement 1:

Date	Account title and Explanation	Debit	Credit
Oct. 11	Treasury stock [5,100 x $26 cost]	$132,600
	Cash		$132,600
	[To record purchase of own shares]
Nov. 1	Cash [1,025 x $32]	$32,800
	Treasury stock [1,025 x $26 cost]		$26,650
	Paid-in capital in excess from treasury stock		$6,150
	[To record sale of treasury stock]
Nov. 25	Cash [4,075 x $21]	$85,575
	Paid-in capital in excess from treasury stock	$6,150
	Retained earnings	$14,225
	Treasury stock [4,075 x $26 cost]		$105,950
	[To record sale of treasury stock]

Requirement 2:

Revised Equity Section of Balance Sheet After October 11
Common stock, $10 par	$730,000
Paid-in capital in excess of par value, common stock	$221,000
Total contributed capital	$951,000
Retained earnings	$872,000
Total	$1,823,000
(Less): Cost of treasury stock	($132,600)
Total stockholders’ equity	$1,690,400