Sheridan Company originally issued 4800 shares of $10 par value common stock for $144000 ($30 per share). Sheridan subsequently purchases 470 shares of treasury stock for $25 per share and resells the 470 shares of treasury stock for $30 per share.

Required:

1. Journalize the two treasury stock transactions.

Following journal entries would be recorded:

Cash A/C Dr. $144000

To Common Stock (4800 shares * 10) 48000

To Paid in capital A/C (4800 shares * 20) 96000

(Being issue of common stock recorded)

Treasury Stock A/C (470 * 25) Dr. 11750

To Cash A/C 11750

(Being purchase of 470 shares recorded)

Cash A/c (470 shares * 30) Dr 14100

To Treasury Stock A/C (470 * 25) 11750

To Paid in capital from treasury stock 2350

(Being sale of treasury stock being recorded)