[ The following information applies to the questions displayed below. ] Whyville

Question

[The following information applies to the questions displayed below.]

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 $51,000 and the following selected transactions occurred in the order given:

1.

value:
10.00 points

Required information

Indicate the account, amount, and direction of the effect for the above transactions. (Enter any decreases to account balances with a minus sign.)

2.

value:
10.00 points

Required information

Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

3.

value:
10.00 points

Required information

Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign.)

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 $51,000 and the following selected transactions occurred in the order given:

Explanation / Answer

(1).

Assets

=

Liabilities

+

Stockholders’ equity

(a).

Cash   + $2080000

NE

Common stock + $130000

Additional paid in capital – common + $1950000

(b).

Cash – ($73100)

NE

Treasury stock – ($73100)

(2).

Items

Accounts Title & Explanation

Debit

Credit

(a).

Cash

$2080000

     Common stock (130000 * $1)

$130000

     Additional paid in capital – Common stock (130000 * $15)

$1950000

(For recording issue of common stock)

(b).

Treasury Stock

$73100

     Cash

$73100

(For recording reacquired of 4300 shares @ $17)

(3).

Whyville Corporation

Balance Sheet (Stockholders’ equity section)

Contributed capital;

Common stock, $1 par value (130000 * $1)

$130000

Additional paid in capital – Common stock (130000 * $15)

$1950000

Total contributed capital

$2080000

Retained earnings

$51000

Less: Treasury stock

($73100)

Stockholders’ equity

$2057900

Assets

=

Liabilities

+

Stockholders’ equity

(a).

Cash   + $2080000

NE

Common stock + $130000

Additional paid in capital – common + $1950000

(b).

Cash – ($73100)

NE

Treasury stock – ($73100)

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