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 |
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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. -
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.