Answer: Please find answers in explanation column
Step-by-step explanation:
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
a)journal entry to record the purchase of shares on Oct 11
Date Account Debit Credit
Oct 11 Treasury stock $125,000
Cash $125,000
Calculation
value of the Treasury stock=No.of shares×Value per share
=5,000×$25 =$125,000
b. journal entry to record the sales of treasury shares.
Date Account Debit Credit
Oct 11 Cash $31,000
Treasury stock $25,000
Paid in capital from the sale of the stock
(31,000 - 25,000) $6,000
Calculation
Cash =No.of shares×Value per share
=1,000×$31 =$31,000
Treasury stock=No.of shares× purchased value of share
=1,000×$25 =$25,000
1c)journal entry to record the sales of the remaining treasury shares
Date Account Debit Credit
Nov 1 Cash $80,000
Paid in capital from the sale of the stock $6,000
Retained earning $14,000
Treasury stock $100,000
Calculation
Remaining treasury shares = 5000-1000= $4000
Cash =No.of shares×Value per share
=4, 000× 20 =$80 ,000
Treasury stock=No.of shares× purchased value of share
=4,000×$25 =$100,000
recall paid in capital from sale = $6000
retained earnings = treasury stock - cash- paid in capital= 100,000- 80,000 - 6,000= $14,000
2) Revised equity of the balance sheet to show new total stockholders’ equity
Account /Particulars Amount
Common stock $ 720,000
Paid-in capital $216,000
Retained earnings $864,000
less Treasury stock ($125,000)
Balance $739,000
Total stockholders equity $1,675,000