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Williamson Corporation was organized to operate a tax preparation business. The charter authorized the following stock: common stock, $6 par value, 84,000 shares authorized. During the first year, the following selected transactions were completed: a. Sold 63,000 shares of common stock for cash at $51 per share. b. Repurchased 2,000 shares from a stockholder for cash at $53 per share.

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Answer:

a. Dr Cash $3,213,000

Cr Common Stock $378,000

Cr Additional Paid in Capital $2,825,000

b. Dr Treasury Stock $106,000

Cr Cash $106,000

Explanation:

Preparation of the appropriate journal entries

a. Dr Cash $3,213,000

(63,000*$51 per share)

Cr Common Stock $378,000

(63,000*$6 per share)

Cr Additional Paid in Capital $2,825,000

($3,213,000-$378,000)

b. Dr Treasury Stock $106,000

Cr Cash $106,000

(2,000*$53 per share)