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Williamson Corporation was organized to operate a tax preparation business. The charter authorized the following stock: common stock, $2 par value, 80,000 shares authorized. During the first year, the following selected transactions were completed:a. Sold 50,000 shares of common stock for cash at $50 per share.b. Repurchased 2,000 shares from a stockholder for cash at $52 per share.

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Answer:

1. Dr Cash $2,500,000

Cr Common stock $100,000

Cr Additional paid in capital $2,400,000

B. Dr Treasury stock $104,000

Cr Cash $104,000

Explanation:

Preparation of the journal entries

1. Dr Cash $2,500,000

(50,000 shares*$50 per share)

Cr Common stock $100,000

($2,500,000-$2,400,000)

Cr Additional paid in capital $2,400,000

[($50-$2)*50,000]

B. Dr Treasury stock $104,000

Cr Cash $104,000

(2,000*$52)

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