Question

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Worldwide Company obtained a charter from the state in January that authorized 200,000 shares of common stock, $10 par value. During the first year, the company earned $37,400, declared no dividends, and the following selected transactions occurred in the order given:

1. Issued 52,000 shares of the common stock at $12 cash per share.
2. Reacquired 1,200 shares at $15 cash per share from stockholders; the shares are now held in treasury.
3. Reissued 600 of the shares in transaction (b) two months later at $18 cash per share.

Required:

1. Indicating the account, amount, and direction of the effect on above transaction. (Enter any decreases to Assets, Liabilities and Stockholders' Equity with a minus sign.)

Answer 1

• Requirement, as asked

	Assets		Liabilities		Stockholder's Equity
a	Cash (52000 shares x $ 12)	$624,000			Common Stock (52000 shares x $ 10 par)	$520,000
					Paid in Capital in Excess of Par - Common Stock (52000 shares x $ 2)	$104,000
b	Cash (1200 shares x $ 15)	($18,000)			Treasury Stock	($18,000)
c	Cash (600 shares x $ 18)	$10,800			Treasury Stock (600 shares x $ 15)	$9,000
					Paid in Capital from Treasury Stock ($10800 - 9000)	$1,800