Exercise 11-10 Recording and reporting treasury stock transactions LO P3 On Octo

Question

Exercise 11-10 Recording and reporting treasury stock transactions LO P3

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

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.

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

Explanation / Answer

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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