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

Exercise 80

Analyzing Accounting Equation Effects, Recording Journal Entries, and Preparing a Partial Balance Sheet Involving Stock Issuance and Purchase Transactions
Whyville Corporation obtained its charter from the state in January 2013, which authorized 500,000 shares of common stock, $1 par value. During the first year, the company earned $58,000 and the following selected transactions occurred in the order given:
a. Issued 200,000 shares of the common stock at $23 cash per share.
b. Reacquired 5,000 shares at $24 cash per share to use as stock incentives for senior management.
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.