Question

complete this question by entering your answers in the tabs below. required 1 required 2 prepare journal entries to record the following transactions for sherman systems. a. purchased 5,200 shares of its own common stock at $27 per share on october 11. b. sold 1,050 treasury shares on november 1 for $33 cash per share. c. sold all remaining treasury shares on november 25 for $26 cash per share. view transaction list journal entry worksheet 1 2 3 record the purchase of 5,200 shares of its own common stock for $27 cash per share. note: enter debits before credits. transaction general journal debit credit a.

Explanation:

Step1: Record purchase of treasury stock

When a company buys its own stock (treasury stock), it debits the Treasury Stock account (a contra - equity account) and credits Cash. The amount is calculated as the number of shares times the purchase price per share.
Debit: Treasury Stock ($5200\times27$) = $140400$
Credit: Cash $140400$

Step2: Record sale of treasury stock at a gain

When selling treasury stock above cost, we first credit Treasury Stock at cost ($1050\times27 = 28350$), then credit Paid - in Capital, Treasury Stock for the gain ($1050\times(33 - 27)=6300$), and debit Cash ($1050\times33 = 34650$)
Debit: Cash $34650$
Credit: Treasury Stock $28350$
Credit: Paid - in Capital, Treasury Stock $6300$

Step3: Record sale of remaining treasury stock at a loss

The remaining treasury stock shares are $5200 - 1050=4150$. The cost of these shares is $4150\times27 = 112050$. The cash received is $4150\times26=107900$. We debit Cash ($107900$), debit Paid - in Capital, Treasury Stock (up to its balance, assume there is enough balance from previous transactions or if not, we can also debit Retained Earnings if needed. Here assume Paid - in Capital, Treasury Stock is used first) for the loss ($112050 - 107900 = 4150$), and credit Treasury Stock ($112050$)
Debit: Cash $107900$
Debit: Paid - in Capital, Treasury Stock $4150$
Credit: Treasury Stock $112050$

Answer:

Transaction	General Journal	Debit	Credit
	Cash		$140400$
b.	Cash	$34650$
	Treasury Stock		$28350$
	Paid - in Capital, Treasury Stock		$6300$
c.	Cash	$107900$
	Paid - in Capital, Treasury Stock	$4150$
	Treasury Stock		$112050$