Whyville Corporation obtained its charter from the state in January that authorized 500,000 sharesof 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.

Question

Whyville Corporation obtained its charter from the state in January that 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.

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