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.

The journal entries required for the redemption as well as the two instances of stock sale is given in details below:

Explanation:

DR CR

11-Oct Treasury stock 5000shares @$5 each 25000

Cash 25000

Being own shares repurchased

1-Nov Cash 31000

Treasury stock 1000 shares issued @$31 each 25000

Paid-in-capital treasury stock 6000

Reissuing treasury stock a higher price

25-Nov Cash 80000

Paid-in-capital treasury stock 6000

Retained earnings 14000

Treasury stock 100000

Reissuing treasury stock at a lower price