Beginning stockholders\' equity 1. Purchased 5,000 shares of its own common stoc

Question

Beginning stockholders' equity

1. Purchased 5,000 shares of its own common stock at $25 per share on October 11.

treasury stock debit 125,000 , cash credit 125,000

2. Sold 1,000 treasury shares on November 1 for $31 cash per share.

cash debit 31,000 , treasury stock credit 25,000 , paid-in capital, treasury stock credit 6,000

3. Sold all remaining treasury shares on November 25 for $20 cash per share.

cash debit 80,000 , paid-in capital, treasury stock ? , retained earnings ?

What is the paid-in capital, treasury stock and retained earnings for number 3?4.

4. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase.

Beginning stockholders' equity

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

1. Purchased 5,000 shares of its own common stock at $25 per share on October 11.

treasury stock debit 125,000 , cash credit 125,000

2. Sold 1,000 treasury shares on November 1 for $31 cash per share.

cash debit 31,000 , treasury stock credit 25,000 , paid-in capital, treasury stock credit 6,000

3. Sold all remaining treasury shares on November 25 for $20 cash per share.

cash debit 80,000 , paid-in capital, treasury stock ? , retained earnings ?

What is the paid-in capital, treasury stock and retained earnings for number 3?4.

4. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase.

Explanation / Answer

Journal Entries :

In the Books of Sherman Systems

Effect of Oct11 Transaction on Total Stockholder's Equity:

Date Particulars Debit($) Credit($) Oct11 Treasury Stock A/c 125,000 Cash 125,000 (Recording of Purchase of own's share) Nov1 Cash A/c 31,000 Treasury Stock A/c 25,000 Paid in Capital From Treasury Stock A/c 6,000 (Recording of sale of treasury Stock and gain on it) Nov25 Cash A/c 80,000 Paid in capital from Treasury Stock A/c 20,000 Treasury Stock A/c 100,000 (Recording of sale of treasury Stock and loss on it)

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