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 $37,200, declared no dividends, and the following selected transactions occurred in the order given: Issued 50,000 shares of the common stock at $13 cash per share.
Reacquired 1,000 shares at $16 cash per share from stockholders; the shares are now held in treasury.
Reissued 500 of the shares in transaction (b) two months later at $19 cash per share.
Required:
1. Indicating the account, amount, and direction of the effect on above transaction.
Assets Liabilities Stockholders' Equity
a.
b.
c.
2. Prepare journal entries to record each transaction.
3. Prepare the stockholders' equity section of the balance sheet at December 31.
(TIP: Because this is the first year of operations, Retained Earnings has a zero balance at the beginning of the year)