Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 74

Analyzing Accounting Equation Effects, Recording Journal Entries, and Preparing a Partial Balance Sheet Involving Stock Issuance and Purchase Transactions
Global Marine obtained a charter from the state in January 2013, which authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $400,000 of net income and the following selected transactions occurred in the order given:
a. Issued 100,000 shares of the common stock at $55 cash per share.
b. Reacquired 25,000 shares at $50 cash per share.
c. Reissued 10,000 shares from treasury for $51 per share.
d. Reissued 10,000 shares from treasury for $49 per share.
Required:
1. Indicate the effects of each transaction on the accounting equation
2. Prepare journal entries to record each transaction.
3. Prepare the stockholders' equity section of the balance sheet at December 31, 2013.