(Treasury Stock—Cost Method—Equity Section Preparation) Washington Company has the following stockholders’ equity accounts at December 31, 2017. Common Stock ($100 par value, authorized 8,000 shares) $480,000 Retained Earnings 294,000 Instructions(a) Prepare entries in journal form to record the following transactions, which took place during 2018.(1) 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.)(2) A $20 per share cash dividend was declared.(3) The dividend declared in (2) above was paid.(4) The treasury shares purchased in (1) above were resold at $102 per share.(5) 500 shares of outstanding stock were purchased at $105 per share.(6) 350 of the shares purchased in (5) above were resold at $96 per share.(b) Prepare the stockholders’ equity section of Washington Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2018 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.
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| Common Stock ($100 par value, authorized 8,000 shares) | $480,000 |
| 294,000 |
Instructions
(a) Prepare entries in journal form to record the following transactions, which took place during 2018.
(1) 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.)
(2) A $20 per share cash dividend was declared.
(3) The dividend declared in (2) above was paid.
(4) The treasury shares purchased in (1) above were resold at $102 per share.
(5) 500 shares of outstanding stock were purchased at $105 per share.
(6) 350 of the shares purchased in (5) above were resold at $96 per share.
(b) Prepare the stockholders’ equity section of Washington Company’s
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