Elston Limited had the following equity accounts on January 1, 2020: Share Capital—Ordinary ($5 par) $400,000, Share Premium—Ordinary $200,000, and Retained Earnings $100,000. In 2020, the company had the following treasury share transactions. Mar. 1 Purchased 5,000 shares at $9 per share. June 1 Sold 500 shares at $12 per share. Sept. 1 Sold 2,500 shares at $10 per share. Dec. 1 Sold 1,000 shares at $6 per share. Elston uses the cost method of accounting for treasury shares. In 2020, the company reported net income of $34,000. Instructions: a. Journalize the treasury share transactions, and prepare the closing entry at December 31, 2020, for net income. b. Post the journal related to these accounts: (1) Share Premium—Treasury, (2) Treasury Shares, and (3) Retained Earnings. Ese a formal form of General Ledger. c. Prepare the equity section for Elston Limited at December 31, 2020.
Elston Limited had the following equity accounts on January 1, 2020: Share Capital—Ordinary ($5 par) $400,000, Share Premium—Ordinary $200,000, and Retained Earnings $100,000. In 2020, the company had the following treasury share transactions. Mar. 1 Purchased 5,000 shares at $9 per share. June 1 Sold 500 shares at $12 per share. Sept. 1 Sold 2,500 shares at $10 per share. Dec. 1 Sold 1,000 shares at $6 per share. Elston uses the cost method of accounting for treasury shares. In 2020, the company reported net income of $34,000. Instructions: a. Journalize the treasury share transactions, and prepare the closing entry at December 31, 2020, for net income. b. Post the journal related to these accounts: (1) Share Premium—Treasury, (2) Treasury Shares, and (3) Retained Earnings. Ese a formal form of General Ledger. c. Prepare the equity section for Elston Limited at December 31, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Elston Limited had the following equity accounts on January 1, 2020: Share Capital—Ordinary ($5 par) $400,000, Share Premium—Ordinary $200,000, and
| Mar. 1 | Purchased 5,000 shares at $9 per share. |
| June 1 | Sold 500 shares at $12 per share. |
| Sept. 1 | Sold 2,500 shares at $10 per share. |
| Dec. 1 | Sold 1,000 shares at $6 per share. |
Elston uses the cost method of accounting for treasury shares. In 2020, the company reported net income of $34,000.
Instructions:
a. Journalize the treasury share transactions, and prepare the closing entry at December 31, 2020, for net income.
b. Post the journal related to these accounts: (1) Share Premium—Treasury, (2) Treasury Shares, and (3) Retained Earnings. Ese a formal form of General Ledger.
c. Prepare the equity section for Elston Limited at December 31, 2020.
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