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 6,600 shares of its own common stock at $41 per share on October 11.

Sold 1,400 treasury shares on November 1 for $47 cash per share.

Sold all remaining treasury shares on November 25 for $36 cash per share.

Common stock–$10 par value, 88,000 shares
authorized, issued, and outstanding $ 880,000 Paid-in capital in excess of par value, common stock 296,000 Retained earnings 992,000 Total stockholders’ equity $ 2,168,000

Explanation / Answer

Journal entry :

Date accounts s& explanation debit credit Oct 11 Treasury stock (6600*41) 270600 Cash 270600 (To record treasury stock purchased) Nov 1 Cash (1400*47) 65800 Treasury stock (1400*41) 57400 Paid in capital from sale of treasury stock (1400*6) 8400 (To record sale of treasury stock) Nov 25 Cash (5200*36) 187200 Paid in capital from sale of treasury stock 8400 Retained earnings 17600 Treasury stock (5200*41) 213200 (To record sale of treasury stock)

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