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Exercise 11-10 Recording and reporting treasury stock transactions LO P3 On October 10, the stockholders’ equity...

Exercise 11-10 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, 92,000 shares
authorized, issued, and outstanding		 $ 920,000
Paid-in capital in excess of par value, common stock 316,000
Retained earnings 1,024,000
Total stockholders’ equity $ 2,260,000


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

Purchased 7,000 shares of its own common stock at $45 per share on October 11.

Sold 1,500 treasury shares on November 1 for $51 cash per share.

Sold all remaining treasury shares on November 25 for $40 cash per share.

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Answer #1

Journal entry :

Date accounts & explanation debit credit
Treasury Stock (7000*45) 315000
Cash 315000
(To record purchase of treasury stock)
Cash (1500*51) 76500
Treasury Stock (1500*45) 67500
Paid in capital from sale of treasury stock 9000
(To record Sale of treasury stock)
Cash (5500*40) 220000
Paid in capital from sale of treasury stock 9000
Retained earnings 18500
Treasury Stock (5500*45) 247500
(To record Sale of treasury Stock)
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