Question

Whyville Corporation obtained its charter from the state in January that authorized 500,000 shares of common stock, $1 par value. During the first year, the company earned $55,000 and the following selected transactions occurred in the order given: a. Issued 170,000 shares of the common stock at $20 cash per share. b. Reacquired 4,700 shares at $21 cash per share to use as stock incentives for senior management. - do journal entries for a & b - balance sheet

Answer 1

Answer a

Accounts Titles & Explanation	Debit ($)	Credit ($)
Cash (170,000 shares * $20 per share)	3,400,000
Common Stock (170,000 shares * $1 per share)		170,000
Paid in Capital in Excess of Par - Common Stock (170,000 shares * $19 per share)		3,230,000
(To record issue of common stock at premium)
Treasury Stock (4,700 shares $21 per share)	98,700
Cash		98,700
(To record repurchase of common stock)

Answer b

Balance Sheet

Shareholder's Equity Section

Particulars	Amount
Contributed Capital
Common Stock , $1 par, 50,000 authorized
170,000 shares & outstanding	$170,000
Additional Paid in Capital - Common	$3,230,000
Total Contributed Capital	$3,400,000
Add :Retained Earnings	$55,000
Total	$3,455,000
Less : Treasury Stock	($98,700)
Total Shareholder's Equity	$3,356,300