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Home/ Questions/On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value,...
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Asked: April 13, 20222022-04-13T07:35:48+00:00 2022-04-13T07:35:48+00:00In: Accounting

On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock-$10 par value,…

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On%20October%2010,%20the%20stockholders'%20equity%20of%20Sherman%20Systems%20appears%20as%20follows.%20Common%20stock-On October 10, the stockholders equity of Sherman Systems appears as follows. Common stock-$10 par value, 92,000 shares auth0%20par%20value,...

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On%20October%2010,%20the%20stockholders'%20equity%20of%20Sherman%20Systems%20appears%20as%20follows.%20Common%20stock-2. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase Revised Equity Sectio0%20par%20value,...
On October 10, the stockholders’ equity of Sherman Systems appears as follows.
Common stock-$10 par value, 92,000 shares authorized, issued, and outstanding $ 920,000
Paid-in capital in excess of par value, common stock  316,000
Retained earnings 1,024,000
Total stockholders’ equity,eee $ 2, 260,000
1. Prepare journal entries to record the following transactions for Sherman Systems.
a. Purchased 7,000 shares of its own common stock at $45 per share on October 11 b. Sold 1,500 treasury shares on November 1 for $51 cash per share.
c. Sold all remaining treasury shares on November 25 for $40 cash per share.
2. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase
Revised Equity Section of Balance Sheet After October 11
Common stock, $10 par
Paid-in capital in excess of par value, common stock
Total contributed capital 0
Retained earnings
Total 0
Less: Cost of treasury stock
Total stockholders’ equity $ o

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♦ Relevant knowledge

Treasury stocks are the stocks that are that are repurchased by the company from shares that were previously issued for the intention of increasing earnings per share or to take advantage of too many shares floating on the market. To record the stock purchase the stock will be recorded as cost, regardless of the par value or declared value, and is deducted from the total equity of stockholders.
equitystock
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    Charles Lee
    2022-04-13T07:35:51+00:00Added an answer on April 13, 2022 at 7:35 am
    Balance Sheet (partial).
    Common Stock $10 par 920,000
    Common stock, paid-in capital exceeding par value 316,000
    Total contributed capital 1,236,000
    Retained earnings 1,024,000
    Total 2,260,000
    Lower:Cost of Treasury Stock -315,000
    Equity of total stockholders 1,945,000

    working:

    Oct-11 Treasury Stock, Common (7000×45). 315,000
    Cash 315,000
    Nov-01 Cash(1500×51) 76,500
    Treasury Stock, Common (1500×45). 67,500
    Treasury Stock, Paid in capital 9,000
    Nov-25 Cash((7000-1500)×40) 137,500
    Treasury Stock, Paid in capital 9,000
    Retained earnings 101,000
    Treasury Stock, Common (5500×45). 247,500
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