Question

Exercise 11-12 Recording and reporting treasury stock transactions LO P3 On October 10, the stockholders' equity of Sherman Systems appears as follows Common stock-$10 par value, 86,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock Retained earnings 860,000 286,000 976,000 $2,122,000 Total stockholders equity 1. Prepare journal entries to record the following transactions for Sherman Systems. a. Purchased 6,400 shares of its own common stock at $39 per share on October 11 b. Sold 1,350 treasury shares on November 1 for $45 cash per share. c. Sold all remaining treasury shares on November 25 for $34 cash per share. 2. Prepare the stockholders' equity section after the October 11 treasury stock purchase

Answer 1

SOLUTION : 1 (A,B,&C)
Journal Entries
Date	ACCT Title and explanation	Debit	Credit
	Treasurry Stock (6400 Shares X $ 39)	$2,49,600
October, 11	Cash		$2,49,600
	(Record the purchase of treasurry Stock)
November, 01	Cash (1,350 Shares X $ 45)	$60,750
	Treasurry Stock (1350 Shares X $ 39)		$52,650
	Paid in Capital in excess of par - Treasurry Stock		$8,100
	(Record the issue of treasurry Stock)
November, 15	Cash (5,050 Shares X $ 34)	$1,71,700
	Paid in Capital in excess of par - Treasurry Stock	$8,100
	Retained Earnings	$17,150
	Treasurry Stock (5,050 Shares X $ 39)		$1,96,950
	(Record the issue of treasurry Stock)
SOLUTION : 2:
	STOCKHOLDER'S EQUITY
	Common Stock - $ 10 Par value , 86,000 Shares
	Authorized , issued and outstanding	$8,60,000
	Paid in capital in excess of par value, Common Stock	$2,86,000
	Retained Earnings	$9,76,000
	Total	$21,22,000
	Less: Treasury Stock	-$2,49,600
	Stockholder's Equity	$18,72,400