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5 January, 02:17

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

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  1. 5 January, 02:38
    0
    The journal entries are shown below:

    a. Treasury Stock A/c Dr $125,000 (5,000 shares * $25)

    To Cash A/c $125,000

    (Being treasure stock is purchased)

    b. Cash A/c Dr $31,000 (1,000 shares * $31)

    To Treasury Stock A/c $25,000 (1,000 shares * $25)

    To Paid in capital - Treasury stock $6,000

    (Being treasury stock is sold at higher price and the remaining amount would be credited to the paid in capital account)

    c. Cash A/c Dr $80,000 (4,000 shares * $20)

    Paid in capital - Treasury stock $6,000

    Retained Earnings A/c Dr $14,000

    To Treasury Stock A/c $100,000 (4,000 shares * $25)

    (Being treasury stock is sold at lower price and the remaining amount would be debited to the retained earning account)
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