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 $38,700 and the following selected transactions occurred in the order given: a. Issued 65,000 shares of the common stock at $13 cash per share. b. Reacquired 2,500 shares at $16 cash per share from stockholders; the shares are now held in treasury. c. Reissued 1,250 of the shares in transaction (b) two months later at $19 cash per share.

Explanation / Answer

3. Prepare stockholder's equity :

Contributed capital Common stock 650000 Paid in capital in excess of par value-common stock 195000 Paid in capital from sale of treasury stock 3750 Total contributed capital 848750 Retained earnings 38700 Total 887450 Less: Treasury stock (20000) Total stockholder's equity 867450

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