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 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.

The journal entries are shown below:

a. Treasury Stock A/c Dr $125,000 (5,000 shares * $25)

To Cash A/c $125,000

(Being treasure stock is purchased)

b. Cash A/c Dr $31,000 (1,000 shares * $31)

To Treasury Stock A/c $25,000 (1,000 shares * $25)

To Paid in capital - Treasury stock $6,000

(Being treasury stock is sold at higher price and the remaining amount would be credited to the paid in capital account)

c. Cash A/c Dr $80,000 (4,000 shares * $20)

Paid in capital - Treasury stock $6,000

Retained Earnings A/c Dr $14,000

To Treasury Stock A/c $100,000 (4,000 shares * $25)

(Being treasury stock is sold at lower price and the remaining amount would be debited to the retained earning account)