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 $61,000, declared no dividends, and the following selected transactions occurred in the order given: Issued 230,000 shares of the common stock at $26 cash per share. Reacquired 5,300 shares at $27 cash per share to use as stock incentives for senior management.

Required information

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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 $61,000, declared no dividends, and the following selected transactions occurred in the order given:

1. Issued 230,000 shares of the common stock at $26 cash per share.
2. Reacquired 5,300 shares at $27 cash per share to use as stock incentives for senior management.

Required:

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

Answer 1

Ans: 1. Account, amount, and direction of the effect for the above transactions.

S.no	Assets	Amount=	Liabilities	Amount	+	Share holder equity		Amount
A).	Cash	5,980,000				Common stock		230,000
						Paid in capital in excess of par		5,750,000
B)	Cash	(143,100)				Treasury stock		(143,100)