Answer:
See the explanation below:
Explanation:
1. Prepare journal entries to record the following transactions for Sherman Systems
a. Purchased 5,500 shares of its own common stock at $30 per share on October 11.
<u>Details Dr ($) Cr ($) </u>
Treasury Stock (5,500 × 30) 165,000
Cash 165,000
<u><em>To record the repurchase of own common stock </em></u>
b. Sold 1,125 treasury shares on November 1 for $36 cash per share.
<u>Details Dr ($) Cr ($) </u>
Cash (1,125 × 36) 40,500
Treasury Stock (1,125 × 30) 33,750
Paid-in Capital from Sale of Treasury Stock 6,750
<em><u>To record the sale of treasury stock. </u></em>
c. Sold all remaining treasury shares on November 25 for $25 cash per share.
<u>Details Dr ($) Cr ($) </u>
Cash (4,375 × 25) 109,375
Paid-in Capital from Sale of Treasury Stock 6,750
Retained Earnings 15,125
Treasury Stock 99,000 (4,375 × 30) 131,250
<em><u>
To record the sale of the remaining treasury shares </u></em>
Kindly note that there is a balance of $6,750 in the Treasury Stock Paid-in Capital account. Since it is utilized, the remaining deficit will show in Retained Earnings.
2. Prepare the stockholders' equity section after the October 11 treasury stock purchase.
<u>Details $ </u>
77,000 issued authorized common stock–$10 par value 770,000
Paid-in capital in excess of par value, common stock 241,000
Retained earnings 904,000
Treasury stock <u> (165,000)</u>
Total stockholders’ equity <u>1,750,000</u>
