Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 4

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

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.
2. Explain how the company's equity section changes after the October 11 treasury stock purchase, and prepare the revised equity section of its balance sheet at that date.