Worldwide Company obtained a charter from the state in January that authorized 2

Question

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 $37400 and the following selected transactions occurred in the order given: a. Issued 52,000 shares of the common stock at $12 cash per share b. Reacquired 1,200 shares at $15 cash per share from stockholders; the shares are now held in treasury. c. Reissued 600 of the shares in transaction (b) two months later at $18 cash per share. References CP11-1 Analyzing Accounting Equation Effects Recording Journal Entries, and Preparing a Partial Balance Sheet Involving Stock Issuance, Purchase, and Reissuance Transactions [LO 11-2] Section Break value: 1.77 points CP11-1 Part 1 Required 1. Indicating the account, amount, and direction of the effect on above transaction. (Enter any decreases to account balances with a minus sign.) Assets Liabilities Stockholders' Equit

Explanation / Answer

1) Assets = Liabilities + Equity a) $                                                    624,000 $        624,000 b) $                                                    (18,000) $        (18,000) c) $                                                      10,800 $          10,800 2)1) Debit Credit Cash $        624,000 Common stock $        520,000 Paid in capital in excess of par $        104,000 2)2) Treasury stock $          18,000 Cash $          18,000 2)3) Cash $          10,800 Treasury stock $            9,000 Paid in capital from treasury stock $            1,800 3) Stockholder's equity Contributed capital Common stock issued, 51,400 shares outstanding $        520,000 Paid in capital in excess of par $        104,000 Paid in capital from treasury stock $            1,800 Total paid in capital $        625,800 Retained earnings $          37,400 Subtotal $        663,200 Less: Treasury stock at cost $          (9,000) Total stockholder's equity $        654,200

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