On October 10, the stockholders equity of Sherman Systems appears as follows: Common stock $ 10 par

Question:

On October 10, the stockholders’ equity of Sherman Systems appears as follows:
—$ 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. Prepare journal entries to record the following transactions for Sherman Systems.
a. Purchased 5,000 shares of its own common stock at $ 25 per share on October 11.
b. Sold 1,000 treasury shares on November 1 for $ 31 cash per share.
c. Sold all remaining treasury shares on November 25 for $ 20 cash per share.
2. Explain how the company’s equity section changes after the October 11 treasury stock purchase, and prepare the revised equity section of its at that date.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...