Question

Whyville Corporation obtained its charter from the state in January that authorized 500,000 shares of common...

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

Homework Answers

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
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