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 $38,900, declared no dividends, and the following selected transactions occurred in the order given:
a. Issued 67,000 shares of the common stock at $11 cash per share. b. Reacquired 2,700 shares at $14 cash per share from stockholders; the shares are now held in the treasury.
c. Reissued 1,350 of the shares in the transaction (b) two months later at $17 cash per share.
1. Indicating the account, amount, and direction of the effect on the above transaction
2. Prepare journal entries to record each transaction
3. Prepare the stockholders’ equity section of the balance sheet at December 31.

Check the explanation

Explanation:

In the books of Worldwide Company:

TransactionGeneral Journal                                 Debit         Credit

/ Event                                                                         $                $

a.        Cash ( 67,000 shares x $ 11 per share )       737,000  

         Common Stock ( 67,000 shares x $ 10 per share)         670,000

Paid-in Capital in Excess of Par: Common Stock                       67,000

b.Treasury Stock ( 2,700 shares x $ 14 per share)37,800  

                               Cash                                                               37,800

c.Cash ( 1,350 shares x $ 17 per share)                   22,950  

Treasury Stock ( 1,350 shares x $ 14 per share )                       18,900

Paid-in Capital : Treasury Stock                                                  4,050

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