Question

Problem 13-02A a-c Whispering Winds Corporation had the following stockholders’ equity accounts on January 1, 2020: Common Stock ($4 par) $400,000, Paid-in Capital in Excess of Par—Common Stock $185,000, and Retained Earnings $110,000. In 2020, the company had the following treasury stock transactions. Mar. 1 Purchased 6,500 shares at $8 per share. June 1 Sold 1,500 shares at $13 per share. Sept. 1 Sold 2,000 shares at $11 per share. Dec. 1 Sold 1,500 shares at $6 per share. Whispering Winds Corporation uses the cost method of accounting for treasury stock. In 2020, the company reported net income of $34,000.

Answer 1

The journal entries, open accounts and stockholders equity section for the following information are given below.

Step-by-step explanation:

Date Account Titles and Explanation Debit Credit

Mar. 1 Treasury Stock 52000

Cash 52000

June 1 Cash 19500

Treasury Stock 12000

Paid-in Capital from Treasury Stock 7500

Sept. 1 Cash 22000

Treasury Stock 16000

Paid-in Capital from Treasury Stock 6000

Dec. 1 Cash 9000

Paid-in Capital from Treasury Stock 3000

Treasury Stock 12000

Dec. 31 Income Summary 34000

Retained Earnings 34000

Paid-in Capital from Treasury Stock

Dec. 1 3000 June 1 7500

Sept. 1 6000

Bal. 10500

Treasury Stock

Mar. 1 52000 June 1 12000

Sept. 1 16000

Dec. 1 12000

Bal. 12000

Retained Earnings

Bal. 110000

Dec. 31 34000

Bal. 144000

WHISPERING WINDS CORPORATION

Balance Sheet (Partial)

December 31, 2020

Stockholders' Equity

Paid-in Capital

Capital Stock

Common Stock 400000

Additional Paid-in Capital

Paid-in Capital in Excess of Par-Common Stock 185000

Paid-in Capital from Treasury Stock 10500

Total Additional Paid-in Capital 195500

Total Paid-in Capital 595500

Retained Earnings 144000

Total Paid-in Capital and Retained Earnings 739500

Less

Treasury Stock (12000)

Total Stockholders' Equity $ 727500